Skip to content

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

Mehta Steel Ltd's parent, Mehta Holdings Ltd, grants Mehta Steel's employees rights to receive a cash payment based on the parent's share price. Mehta Holdings settles this obligation in cash when Mehta Steel receives the services. How does Mehta Holdings recognise the transaction under para 43C of Ind AS 102?

Mehta Holdings recognises it as a cash-settled share-based payment. Para 43C allows equity-settled treatment only when the settling entity settles in its own equity instruments, and here settlement is in cash, even though the amount is linked to its share price.

  1. AAs equity-settled, because the amount is linked to its own share price
  2. BAs a cash-settled share-based payment, because it is not settled in its own equity instrumentsCorrect
  3. CAs equity-settled until the cash is paid, then reclassified
  4. DAs an employee benefit outside Ind AS 102

Explanation

Para 43C permits equity-settled classification only if the settling entity settles in its own equity instruments. Settlement here is in cash, so the transaction is recognised as cash-settled. Linking the amount to the share price does not make it equity-settled.

Did you get it right without looking?

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

Practise Ind AS 102 Share Based PaymentFree diagnostic mock

More Ind AS 102 Share Based Payment questions