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ACCA Strategic Professional · Strategic Business Reporting (International) · Share-based payment

Zeta plc grants 1,000 share options to each of its 50 employees. The options vest after three years of service. Under IFRS 2, how is this arrangement classified if Zeta must deliver its own equity instruments on exercise?

The arrangement is an equity-settled share-based payment, because Zeta receives employee services and pays for them by issuing its own equity instruments (options) rather than paying cash or other assets based on its share price.

  1. AEquity-settled share-based payment transactionCorrect
  2. BCash-settled share-based payment transaction
  3. CA transaction with a choice of settlement held by the employee
  4. DA defined benefit plan under IAS 19

Explanation

When the entity receives services and settles by issuing its own equity instruments, the transaction is equity-settled under IFRS 2. Cash-settled would require a liability based on the share price, which is not the case here. It is not a post-employment plan.

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