CERTYNEX IFRS ACADEMY

A plan gives each employee, at vesting, the choice between a sum in cash and a number of shares of the entity. How is the award classified?

As cash-settled in full, because the existence of a cash choice creates a liability for the whole award.

As equity-settled in full, because the employee may in the end choose to receive shares.

As equity-settled until the choice is exercised, then reclassified as a liability if the employee opts for cash.

As a compound financial instrument: the right to cash is the liability component, the right to shares the equity component.