Replacement share-based payment awards

Learning objectives

• Calculate the portion of a replacement award included in the consideration transferred (pre-combination service), using the percentage given in the case.L3, L4
• Record the post-combination remuneration expense of the replacement award.L3, L4

Normative references

• IFRS 3 §30Liabilities or equity instruments related to share-based payment transactions of the acquiree, or to the replacement of those transactions with share-based payment transactions of the acquirer, are measured at the acquisition date in accordance with the method in IFRS 2; IFRS 3 refers to the result as the "market-based measure".
• IFRS 3 §B56Replacement of the acquiree's awards: the exchange is accounted for as a modification under IFRS 2. If the acquirer replaces the awards, all or part of the market-based measure of the replacement awards is included in the consideration transferred (allocation in paras. B57 to B62); however, if the acquiree's awards would expire as a consequence of the business combination and the acquirer replaces them without being obliged to do so, the whole measure is recognised as post-combination remuneration cost. The acquirer is obliged to replace the awards if the acquiree or its employees can enforce replacement (acquisition agreement, terms of the awards, laws or regulations).

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

1 question

• On acquiring Cher SA, the acquirer replaces the share awards of Cher's employees with awards in its own name, whose market-based measure at the acquisition date is {award_value}. Case convention: the services rendered before the combination represent {pre_service_share} of the total vesting period (case data). Calculate the portion of the replacement award included in the consideration transferred.L4