2016 amendment: conditions in cash-settled transactions

Learning objectives

• Explain the effect of market, service and non-market performance conditions on the measurement of a cash-settled liability.L3
• Calculate the liability for a cash-settled award with a service condition.L3

Normative references

The syntheses of the reference register are written in French: only the paragraph reference is shown here.

2 questions

• For cash-settled share appreciation rights with a three-year service condition, a controller allows for the expected leavers by reducing the unit fair value of each right. What is the error?L3
• Helia SA has granted cash-settled share appreciation rights, with a four-year service condition. At the end of year three, the fair value of all the rights granted, measured at that date and ignoring the service condition, is {fair_value_all_rights} (case data). The entity expects {expected_vest_percent} of the rights to vest; case convention: the elapsed share of the vesting period is {elapsed_share}. The 2016 amendment applies to annual periods beginning on or after 1 January 2018. Compute the fair value of the rights expected to vest, then the liability at the closing date.L3