Equity Settled Share Based Payment Transactions To Recognize Services Rendered

588 words - 2 pages

Equity-settled share-based payment transactions are those, in which the entity receives goods or services as consideration for the equity instruments of the entity. The goods or services received in an equity-settled share-based payment transactions and the corresponding increase in equity must be measured at the fair value of the goods or services, unless that the fair value cannot be estimated reliably. An Equity settled transactions with employees and directors would be normally expensed on the based of their fair value at the grant date. It is normally considered that the fair value of services received in the equity settled share based payment transactions with employees, cannot be measured reliably. Thus, the fair value of the services received from employees is measured by reference to the equity instruments granted, at grant date.

The AASB 2’s objective about an equity based transactions with employees is to determine and recognize the services are rendered. There are certain conditions that that may need to be satisfied before the employees to a share based transactions becomes entitled to receive the cash. These are called vesting conditions. The vesting conditions are those which must be met by employees to become entitled to receive cash or the other equity instrument of the entity, under the share based payments. When the conditions have been satisfied, the employee's entitlement has vested. If the equity instruments vest immediately, the employee is not required to serve a specified period of service before becoming unconditionally entitled to that equity instruments. On grant date, the services received would be recognized in full together with the corresponding increase in equity.

However, if the equity instruments do not vest until a period of the service has been completed, that the services and...

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