CERTYNEX IFRS ACADEMY

A trainee records the annual expense of an executive option plan, settled in shares, by crediting a liability account "amounts owed to executives". What is the error?

The expense should have been deferred until the options are exercised, when an amount becomes owed to the executives.

The liability should have been remeasured at fair value at each closing, as for any plan, whatever its settlement method.

The credit should have gone to income, the expense being offset by the value of the service received from the executives.

The counterpart of an equity-settled transaction is an increase in equity, not a liability.