Skip to content

CMA Final · Corporate Financial Reporting · Share based Payment (Ind AS 102)

Bharat Steels Ltd is the parent. Its subsidiary, Kaveri Alloys Ltd, receives services from its employees. The parent grants those employees rights to the parent's own shares and settles the obligation by issuing the parent's own equity instruments. Under Ind AS 102, how should the parent (the settling entity) recognise the transaction in its own financial statements?

The parent recognises it as an equity-settled share-based payment. Under paragraph 43C, the settling entity uses equity-settled treatment only when it settles in its own equity instruments, which is the case here even though the subsidiary receives the services.

  1. AAs an equity-settled share-based payment transaction, because it is settled in the entity's own equity instrumentsCorrect
  2. BAs a cash-settled share-based payment transaction, because another group entity receives the services
  3. CAs a financial liability under Ind AS 109, because the recipient is outside the settling entity
  4. DNot recognised, because the services are received by the subsidiary

Explanation

Paragraph 43C says 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. The parent settles in its own shares, so equity-settled treatment applies. The cash-settled option would apply only if settlement were in something other than its own equity.

Did you get it right without looking?

One question tells you little. A timed set on Share based Payment (Ind AS 102) shows your real accuracy, how long you take and where you lose marks.

Practise Share based Payment (Ind AS 102)Free diagnostic mock

More Share based Payment (Ind AS 102) questions