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

Zenith Pharma Ltd grants options to its employees. While preparing its financial statements, the finance head asks which valuation basis Ind AS 102 requires for measuring the fair value of the equity instruments granted. Which statement is correct?

Fair value under Ind AS 102 is measured in accordance with that Standard and not Ind AS 113. Paragraph 6A explains that Ind AS 102 uses the term fair value in a way that differs in some respects from the Ind AS 113 definition.

  1. AFair value is measured in accordance with Ind AS 102 itself, not Ind AS 113, because the Standard uses 'fair value' differently in some respectsCorrect
  2. BFair value is always measured strictly under Ind AS 113 as an exit price in an orderly transaction
  3. CFair value is the intrinsic value on the grant date, being market price less exercise price
  4. DFair value is the face value of the underlying shares multiplied by the number of options

Explanation

Paragraph 6A states that the term 'fair value' in Ind AS 102 differs in some respects from the Ind AS 113 definition. Therefore an entity measures fair value in accordance with Ind AS 102, not Ind AS 113. Option B reverses this rule.

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