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

Bharat Infra Ltd's subsidiary, Bharat Roads Ltd, receives services from its employees. Bharat Roads Ltd itself has no obligation in shares. Bharat Infra Ltd will settle the award by paying cash equal to the value of its shares. How should Bharat Infra Ltd, the settling entity, recognise the transaction as per Ind AS 102?

Bharat Infra Ltd recognises it as a cash-settled share-based payment transaction. The equity-settled treatment is available to the settling entity only when settlement is in its own equity instruments, and here it settles in cash, so the cash-settled treatment applies.

  1. AAs an equity-settled transaction, since the group's parent is involved
  2. BAs a cash-settled share-based payment transaction, because it is not settled in its own equity instrumentsCorrect
  3. CAs an equity-settled transaction only if the subsidiary is wholly owned
  4. DAs a transaction outside Ind AS 102 until cash is paid

Explanation

Under 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. Settlement in cash means it is recognised as a cash-settled share-based payment transaction. Ownership percentage does not change this test.

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