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Please provide summary on Ind AS 102 - Share-based Payment

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Prity asked almost 3 years ago

Please provide summary on Ind AS 102 - Share-based Payment

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5 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Ashika answered over 2 years ago

The objective of this Standard is to specify the financial reporting by an entity when it undertakes a share-based payment transaction. In particular, it requires an entity to reflect in its profit or loss and financial position the effects of share-based payment transactions, including expenses associated with transactions in which share options are granted to employees. An entity shall apply this Standard in accounting for all share-based payment transactions, whether or not the entity can identify specifically some or all of the goods or services received, including: (a) equity-settled share-based payment transactions, (b) cash-settled share-based payment transactions

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Open uri20170510 32134 59004f?1494421790 Anshul Dhawan answered over 2 years ago

Ind AS 102 applies to all share-based payment arrangements. A share-based payment arrangement is defined as: An agreement between the entity (or another group entity or any shareholder of any group entity) and another party (including an employee) that entitles the other party to receive: 1. cash or other assets of the entity for amounts that are based on the price (or value) of equity instruments (including shares or share options) of the entity or another group entity, or 2. equity instruments (including shares or share options) of the entity or another group entity. The accounting treatment under Ind AS 102 is based on the fair value of the instruments. Both the valuation of and the accounting for awards sometimes can be difficult due to the complex models that may need to be used to calculate the fair value of options, and also due to the variety and complexity of schemes. In addition, the standard requires extensive disclosures. The result generally is reduced reported profits, especially in entities that use share-based payment extensively as part of their remuneration strategy. All transactions involving share-based payment are recognised as expenses or assets over underlying vesting period. Equity-settled share-based payment transactions are measured at the grant date fair value for employee services; and, for non-employee transactions, at the fair value of the goods or services received at the date on which the entity recognises the goods or services. If the fair value of the goods or services cannot be estimated reliably—such as employee services and circumstances in which the goods or services cannot be specifically identified—the entity uses the fair value of the equity instruments granted. Equity-settled share-based payment transactions are not remeasured once the grant date fair value has been determined.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Anil Dhawan answered over 2 years ago

Objective of Ind AS 102 The objective of Ind AS 102 is to specify the financial reporting by an entity when it undertakesshare-based payment transaction. In other words, it requires an entity to reflect in its profit or loss and financial position the effects of share-based payment transactions, including expenses associated with transactions in which share options are granted to employees. Ind AS 102 covers following type of share based payment transactions: (a) Equity-settled share-based payment transactions. (b) Cash-settled share-based payment transactions. (c) Share-based payment transactions where there is a choice of settlement between equity settled or cash settled. An entity might acquire goods (or other non-financial assets) as part of the net assets acquired in a business combination for which the consideration paid included shares or other equity instruments issued by the entity. Because Ind AS 103 applies to the acquisition of assets and issue of shares in connection with a business combination, that is the more specific standard that should be applied to that transaction. Therefore, equity instruments issued in a business combination in exchange for control of the acquiree are not within the scope of Ind AS 102. However, equity instruments granted to employees of the acquiree in their capacity as employees, eg in return for continued service, are within the scope of Ind AS 102. Also, the cancellation, replacement, or other modifications to share-based payment arrangements because of a business combination or other equity restructuring should be accounted for in accordance with Ind AS 102. 3. Current practices Under existing Indian GAAP, there is no mandatory standard which deals with the share based payments. Employee share-based transactions are accounted for as per the accounting treatment prescribed the Guidance Note on Employee Share-based Payments. Under the guidance note, the employee compensation costs are calculated either using the intrinsic value or fair value method of accounting for options issued under various Employee Stock Option Schemes. If the fair value of the share and the exercise price of the share were same on the grant date then no accounting charge is required to be recorded by the entity. Further, the entity has to give additional disclosure in case intrinsic value method is adopted: ✓ Difference between the employee compensation cost so computed as per intrinsic method and the employee compensation cost that shall have been recognised if it had used the fair value of the options. ✓ The impact of above difference on profits and on earnings per share of the entity. Difference between Intrinsic value and Fair value Particulars Intrinsic value as per guidance note Intrinsic value as per Ind AS 102 Fair value as per Ind AS 102 Definition Intrinsic value is the amount by which the quoted market price of the underlying share in case of listed enterprise or the value of the underlying share determined by an independent valuer in case of an unlisted enterprise, exceeds the exercise of an option The difference between the fair value of the shares to which the counterparty has the (conditional or unconditional) right to subscribe or which it has the right to receive, and the price the counterparty is (or will be) required to pay for those shares. For example: A share option with an exercise price of Rs. 15, on a share with a fair value of Rs. 20, has an intrinsic value of Rs. 5 ( Rs 20-15) The amount for which an asset could be exchanged, a liability settled, or an equity instrument granted could be exchanged, between knowledgeable, willing parties in an arm's length transaction. Calculation Method Intrinsic value = quoted market price or value determined by valuer less Exercise price Intrinsic value = FV of share less Exercise price Using valuation techniques like Black Scholes option pricing model.

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Open uri20170510 32134 1ue0f38?1494421710 rohit agarwal answered over 2 years ago

Please provide summary on Ind AS 102 - Share-based Payment The objective of this Standard is to specify the financial reporting by an entity when it undertakes a share-based payment transaction. In particular, it requires an entity to reflect in its profit or loss and financial position the effects of share-based payment transactions, including expenses associated with transactions in which share options are granted to employees. An entity shall apply this Standard in accounting for all share-based payment transactions, whether or not the entity can identify specifically some or all of the goods or services received, including: (a) equity-settled share-based payment transactions, (b) cash-settled share-based payment transactions, and (c) transactions in which the entity receives or acquires goods or services and the terms of the arrangement provide either the entity or the supplier of those goods or services with a choice of whether the entity settles the transaction in cash (or other assets) or by issuing equity instruments,

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Data?1494421730 rohit awasthi answered almost 3 years ago

Dear Friend > Ind AS 102 - Share-based Payment Ind AS 102 applies to all share-based payment arrangements. A share-based payment arrangement is defined as: An agreement between the entity (or another group entity or any shareholder of any group entity) and another party (including an employee) that entitles the other party to receive: 1. cash or other assets of the entity for amounts that are based on the price (or value) of equity instruments (including shares or share options) of the entity or another group entity, or 2. equity instruments (including shares or share options) of the entity or another group entity. The accounting treatment under Ind AS 102 is based on the fair value of the instruments. Both the valuation of and the accounting for awards sometimes can be difficult due to the complex models that may need to be used to calculate the fair value of options, and also due to the variety and complexity of schemes. In addition, the standard requires extensive disclosures. The result generally is reduced reported profits, especially in entities that use share-based payment extensively as part of their remuneration strategy. All transactions involving share-based payment are recognised as expenses or assets over underlying vesting period. Equity-settled share-based payment transactions are measured at the grant date fair value for employee services; and, for non-employee transactions, at the fair value of the goods or services received at the date on which the entity recognises the goods or services. If the fair value of the goods or services cannot be estimated reliably—such as employee services and circumstances in which the goods or services cannot be specifically identified—the entity uses the fair value of the equity instruments granted. Equity-settled share-based payment transactions are not remeasured once the grant date fair value has been determined. The treatment is different for cash-settled share-based payment transactions—cash-settled awards are measured at the fair value of the liability. The liability is remeasured at each balance sheet date through the date of settlement, with changes in fair value recognised in the income statement. Thanks

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