PFRS #2 Share-based Payment

• what is PFRS 2 about?

  Share-based payment
• Corporation Code of the Philippines - prohibits the issuance of shares in exchange for promissory notes or future services.
• Share-based payment transaction - a transaction in which the entity acquires goods and services and pays for them by issuing its own equity instruments or cash based
• Three share based payment transaction - 1. Equity-settled share-based payment transaction 2. Cash-settled share -based payment transaction 3. Choice between equity-settled and cash-settled
• Equity-settled - entity receives goods or services and pays for them by issuing its shares of stocks or share options.
• Cash-settled - entity receives goods or services and incurs an obligation to pay cash at an amount that is based on the fair value of its own equity instruments
• Equity instrument - a contract that evidences are residual interest in the assets of an entity after deducting all of its liabilities
• Grand date- is the date at which the entity and the counterparty agreed to, and have shared understanding of the terms and conditions of, a shared payment arrangement.
• Intrinsic Value- is the difference between the fair value of the shares which the counterparty has the right to subscribe or receive and the subscription price that the counterparty is required to pay
• Share-based compensation plan - is an arrangement whereby in exchange for services, an employee is compensated in the form of the entity's equity instrument.
• Share Option - is a contract that gives the holder the right, but not the obligation, to subscribe to the entity's shares at a fixed or determinable price for a specified period of time
• goods and services received that do not qualify as assets are recognized as - expenses
• equity settled share based payment transaction with:

  1. non-employees: a. fair value of goods or services received, b. fair value of equity instruments granted
  2. employees and other providing similar services: a. fair value of equity instruments granted, b. intrinsic value
• service condition means to be entitled to receive or subscribe to the shares embodied in the share options, the employee needs to remain in the entity's employ for a specific period of time, and accounted for prospectively
• share appreciation right

  • the most common form of a cash-settled share-based payment transaction granted to an employee.
  • is a form of compensation given to an employee whereby the employee is entitled to future cash payment
• compound instrument is one which includes both a debt component and an equity component