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WorkpaperIFRS 2 — Share-based PaymentL2 · L3 · L4

Share-based award: settlement method, grant date, classification of the conditions and settlement alternative

9 missions7 sections to document60 min
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Status
Published

Objective of the workpaper

Record the terms of the award, the approvals and the dates, the conditions of the plan and, where the entity or the counterparty can choose the settlement method, the settlement practice of the entity. Classify the settlement method, fix the grant date, classify each condition (service, non-market performance, market, non-vesting) and, for a settlement alternative at the choice of the entity, assess whether it has a present obligation to settle in cash. The terms, the dates and the amounts are case data; each classification remains a supported judgment.

7 sections · 21 blocks · 0 calculations · 0 entries

  • IFRS 2 §2
  • IFRS 2 §30
  • IFRS 2
  • IFRS 2
  • IFRS 2 §19
  • IFRS 2 §21
  • IFRS 2 §21A
  • IFRS 2 §34
  • IFRS 2 §41

Work this workpaper as a mission

Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.

9 instances from the cases: the calculations and entries below are run by the calculation engine.

File and entity
Share-linked plans: settlement method, grant date and first expense
Case tasks documented here
  • Classify the settlement method of plan A and of bonus B.
  • Determine the grant date of plan A.
1

Facts and data

Inputs

  • Terms of the award: beneficiaries, instruments, exercise price, planned settlement method

    TextRequired

    OPTIONS_TO_SUBSCRIBE_NEW_SHARES_FOR_200_EMPLOYEES_PAID_IN_SHARES

  • Approvals required, date of agreement on the terms and start of the services

    TextRequired

    BOARD_APPROVAL_THEN_TERMS_COMMUNICATED_THEN_SHAREHOLDER_APPROVAL_REQUIRED_AND_OBTAINED_ON_20_MARCH_20X6

  • Conditions of the plan: service, performance, share price, other conditions

    TextRequired

    EMPLOYED_ON_31_DECEMBER_20X8_AND_THREE_OTHER_CONDITIONS_NOT_ASSESSED_IN_THIS_CASE

  • Settlement practice of the entity and any choice of the counterparty or of the entity

    Text

    NO_CHOICE_OF_SETTLEMENT_NEW_SHARES_ISSUED_ON_EXERCISE

  • Number of instruments granted (case data)

    Number

    20,000 units

  • Unit fair value at the grant date (case data)

    Number

    8

  • Total fair value of the award or of the alternative examined (case data)

    Number

2

Supporting documents

Evidence

  • Documents obtained and referenced (plan rules, approval minutes, communication to the beneficiaries)

    EvidenceRequired

3

Analysis of the settlement method, the grant date and the conditions

Analysis

IFRS 2 §2IFRS 2 §30IFRS 2IFRS 2IFRS 2 §19IFRS 2 §21IFRS 2 §21AIFRS 2 §34IFRS 2 §41IFRS 2

  • Points examined: settlement method and grant date

    ChecklistRequired

    • Consideration: equity instruments of the entity, or a liability based on their price, or a choice between the two
    • Agreement of the entity and the counterparty on the terms, with a shared understanding
    • All the necessary approvals obtained (shareholders, board)
    • Services started before the grant date: fair value estimated for the earlier period
    • Cash payment unrelated to the share price: employee benefit outside IFRS 2

  • Points examined: conditions

    ChecklistRequired

    • Service and non-market performance conditions: taken into account in the number of instruments expected to vest
    • Market condition (target price): taken into account in the fair value, expense recognised whether or not the condition is met
    • Non-vesting condition: taken into account in the grant-date fair value
    • Each condition classified separately from its terms, not from its name
4

Judgments: settlement method, grant date, type of condition and present obligation

Judgment

IFRS 2 §2IFRS 2 §30IFRS 2IFRS 2IFRS 2 §19IFRS 2 §21IFRS 2 §21AIFRS 2 §34IFRS 2 §41IFRS 2

  • Settlement method of the award

    JudgmentRequired

    Equity-settled

    Equity-settled / Cash-settled / Settlement alternative at the choice of the counterparty / Settlement alternative at the choice of the entity / Outside the scope of IFRS 2 / Not applicable

    Professional judgment: the classification is supported by the terms of the award and by the rights and obligations of the entity; the name of the plan is not enough.

  • Rationale: nature of the consideration, rights and obligations of the entity

    Text

    NEW_SHARES_ARE_ISSUED_IF_THE_OPTIONS_ARE_EXERCISED

  • Grant date

    JudgmentRequired

    Grant date reached: agreement on the terms and approvals obtained

    Grant date reached: agreement on the terms and approvals obtained / Grant date not reached: a necessary approval is missing / Not applicable

    Professional judgment: the grant date is when the agreement on the terms and all the necessary approvals are in place, not the date of the first communication.

  • Rationale: dates of agreement, approval and start of the services

    Text

    TERMS_AGREED_AND_SHAREHOLDER_APPROVAL_OBTAINED_ON_20_MARCH_20X6

  • Type of the condition examined

    JudgmentRequired

    Not applicable

    Service condition / Non-market performance condition / Market condition / Non-vesting condition / Not applicable

    Professional judgment: a condition is classified from what it requires of the counterparty and of the entity; its treatment (number of instruments or fair value) follows.

  • Rationale: link with the service, the performance of the entity or the share price, and the resulting treatment

    Text

  • Present obligation to settle in cash (alternative at the choice of the entity)

    JudgmentRequired

    Not applicable

    Present obligation to settle in cash / No present obligation to settle in cash / Not applicable

    Professional judgment: the assessment concerns the existence of a present obligation, whether or not the choice depends on the share price; it is supported by the facts of the case.

  • Rationale: past settlement practice, commitments made and announced policy

    Text

5

Items to document for the disclosures

Disclosure

IFRS 2 §2

  • Information to prepare on the arrangements classified

    Checklist

    • Description of each arrangement: beneficiaries, vesting conditions, maximum term, settlement method
    • Significant judgments that led to the classification
6

Conclusion

Conclusion

  • Settlement method retained, grant date, type of each condition and conclusion on the present obligation, with the decisive terms

    ConclusionRequired

7

Normative references

References

  • Normative references cited in this workpaper

    References

8

Checks and financial statement impact

  • Terms of the award describedPass
  • Approvals and dates describedPass
  • Conditions of the plan describedPass
  • Settlement method judged and supportedPass
  • Grant date judged and supportedPass
  • Type of condition judged and supportedPass
  • Present obligation judged or ruled outPass
Assets
0
Liabilities
0
Profit or loss
0
OCI
0
Equity
0