The share-based payment transaction: goods or services for shares or a liability linked to the share

Learning objectives

• Explain that a share-based payment transaction is an exchange of goods or services for equity instruments of the entity or for a liability based on the price of its shares.L1
• Identify, from the facts of a case, whether a transaction is a share-based payment.L1

Normative references

• IFRS 2 §2The Standard applies to all share-based payment transactions, whether or not the entity can identify specifically some or all of the goods or services received: equity-settled transactions, cash-settled transactions, and transactions in which the entity or the supplier may choose between settlement in cash (or other assets) and the issue of equity instruments, subject to the exceptions in paras. 3A to 6. In the absence of specifically identifiable goods or services, other circumstances may indicate that goods or services have been (or will be) received.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

5 questions

• Vektra SA pays its sales staff each year a cash bonus equal to 3% of revenue, with no link to the price of its shares; this bonus is a share-based payment transaction.L1
• Which of these situations is a share-based payment transaction?L1
• A colleague writes: "IFRS 2 covers option plans reserved for executives; shares given to a supplier in return for its services are not covered." What is the error in this reasoning?L1
• Cobalt SA pays its employees two cash bonuses: bonus X, equal to 4% of the profit for the year, and bonus Y, equal to the rise in Cobalt's share price multiplied by 500. Which treatment is correct?L2
• Zéphyr SA examines two contracts: (1) the grant to its employees of options on its own shares in exchange for their services; (2) a contract to buy copper, a non-financial item, that can be settled net in cash and is not held for its own supply requirements. Which standard governs each?L2