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

Meena Textiles Ltd, the parent, grants its own equity shares to employees of its wholly owned subsidiary, Meena Spinners Ltd, and Meena Textiles itself settles the award by issuing those shares. Under Ind AS 102, how should Meena Textiles recognise this transaction in its own books as the settling entity?

Meena Textiles should recognise it as equity-settled, because the settling entity treats a group share-based payment as equity-settled only if it is settled in its own equity instruments, and here it issues its own shares.

  1. AAs a cash-settled share-based payment transaction
  2. BAs an equity-settled share-based payment transaction, because it is settled in the entity's own equity instrumentsCorrect
  3. CAs a business combination under Ind AS 103
  4. DAs a transaction outside the scope of Ind AS 102

Explanation

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. Meena Textiles settles with its own shares, so equity-settled treatment applies. Cash-settled treatment applies only when settlement is otherwise.

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