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CA Final · Financial Reporting · Ind AS 102 Share Based Payment

Ananya Holdings Ltd (parent) grants its own equity shares to employees of its subsidiary, Ananya Retail Ltd, which receives the services. The parent settles the arrangement. How should the parent treat the transaction in its books as per Ind AS 102 on group share-based payments?

The parent recognises it as an equity-settled share-based payment. When the entity settling the transaction uses its own equity instruments, it classifies the transaction as equity-settled even though another group entity receives the services. Otherwise it would be cash-settled.

  1. AAs a cash-settled share-based payment, because the services are received by another entity
  2. BAs an equity-settled share-based payment, because it settles in its own equity instrumentsCorrect
  3. CAs a cash-settled transaction until the subsidiary pays the parent
  4. DAs outside Ind AS 102, since the employees are not employees of the parent

Explanation

Per paragraph 43C, the entity settling a transaction when another group entity receives the services recognises it as equity-settled only if settled in its own equity instruments; otherwise as cash-settled. The parent settles in its own shares, so it is equity-settled. The cash-settled option wrongly focuses on who receives services.

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