Page 14 - Finac1 Test 2 slides - 4. Share-based Payment (IFRS 2)

SHARE-BASED PAYMENT

Accounting for SBP

Introductory example:

• Company Z issued share options to 100 employees

• Right to buy 5 000 Company Z shares each

• Exercise price is R2 per share

• Fair value (FV) is R40 per share

• What happens when the share options are exercised?

• But the shares are worth R20 million (100 x 5 000 x

R40)!

• R19 million worth of transaction not recorded

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