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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