Page 15 - PowerPoint Presentation

Share-based Payment
Essential Elements

• Accounting entries depends on how settled:

• Equity-based SBP

• Dr P/L
• Cr Equity (SCE)

• Cash-settles SBP

• Dr P/L
• Cr Liability (SFP)

• Choice of settlement at option of counterparty

• Examined at Level 1

• Transactions with owners can not affect P/L ( Framework) –

SBP with suppliers

• Controversy surrounding accounting of SBP

• Expense where company will never pay out any cash

• No change to NAV (Net Asset Value)

• Is this an expense to the company?
• Who really bares the expense?

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