IFRS 2 – Share-based Payment

IFRS 2 Share-based Payment was introduced in 2004 and the accounting principles have remained largely unchanged since.

Share-based payments have become increasingly popular over the years, with many entities using equity instruments or cash and other assets based on the value of equity instruments as a form of payment to directors, senior management, employees and other suppliers of goods and services.

The accounting of share-based payments is an area that remains not well understood and this is evidenced by a number of interpretations and agenda decisions being issued by the IFRS Interpretations Committee (IFRIC). Considerable care needs to be applied in evaluating the requirements set out in IFRS 2 and other authoritative guidance to increasingly complex and innovative share-based payment arrangements.

The Insights into IFRS 2 series is aimed at demystifying the standard by explaining the fundamentals of accounting for share-based payments using relatively simple language and providing insights to help entities cut through some of the complexities associated with accounting for these types of arrangements. The first two publications are as follows:

• What is IFRS 2?
• Classification of share-based payment transactions and vesting conditions

The publications mentioned above follow this IFRS Adviser Alert.