CoreBeginner · Intermediate

Equity-settled, cash-settled or with a choice of settlement

Learning objectives

Distinguish an equity-settled transaction, a cash-settled transaction and a transaction with a choice of settlement.L1
Determine the settlement method of an award from its terms and justify the classification.L2

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.
IFRS 2 §30For a cash-settled transaction, the entity measures the goods or services acquired and the liability incurred at the fair value of the liability, subject to paras. 31 to 33D; until the liability is settled, its fair value is remeasured at the end of each reporting period and at the date of settlement, with changes recognised in profit or loss for the period; example: share appreciation rights (para. 31).

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