Skip to content

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

Rohan Engineering Ltd's subsidiary receives employee services, but the subsidiary itself settles the award by paying cash linked to the value of the parent's shares. How does Ind AS 102 require the settling subsidiary to classify the transaction?

It is cash-settled. The settling entity may treat a group share-based payment as equity-settled only when it settles in its own equity instruments, and a subsidiary paying cash does not do so.

  1. AEquity-settled, because the reference shares belong to the parent
  2. BCash-settled, because it is not settled in the settling entity's own equity instrumentsCorrect
  3. CEquity-settled, because the services are received by a group entity
  4. DNot recognised until the cash is paid

Explanation

The settling entity recognises an equity-settled transaction only if settled in its own equity instruments. Otherwise it is cash-settled. The subsidiary pays cash and does not issue its own equity, so it is cash-settled. Referencing the parent's shares does not make it equity-settled.

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