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

Kiran Textiles Ltd's parent, Kiran Group Ltd, settles in cash a share-based payment to employees of Kiran Textiles, which receives the services. Which classification applies to the settling entity, Kiran Group Ltd, as per Ind AS 102?

It is a cash-settled share-based payment in the settling entity's books. The group settling entity may classify a transaction as equity-settled only when it settles in its own equity instruments, and cash settlement does not satisfy that condition.

  1. AEquity-settled, since the employees are in the group
  2. BEquity-settled, since the subsidiary's own shares are not involved
  3. CCash-settled, since it is not settled in the settling entity's own equity instrumentsCorrect
  4. DNot recognised by the settling entity, only by the subsidiary

Explanation

Paragraph 43C: the settling entity recognises an equity-settled transaction only if settled in its own equity instruments; otherwise it is cash-settled. Settlement here is in cash, so it is cash-settled. Treating it as equity-settled ignores the settlement condition.

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