IFRS 2

Question 1

Share appreciation rights granted to recognized in PBT for YE

Answer 1

• Sub is an entity within the group of Co. they are receiving service from their execs EE’s in exchange for cash amounts that are based on price of equity instruments of another entity
• Since they are receiving the services provided by execs they have to account for SBP expenses within their separate FS
• Co has no obligation to settle SBP accounted as equity settled SBP trxn
• FV of services received is measured indirectly with reference to FV of equity instrument granted
• They should measure the SAR at grant date
• The vesting period of x years taking into account estimates of number expected to vest
• No adjustment made subsequent to vesting date
• Group has an obligation to settle trxns in cash -cash settled
• Measure at FV of liability, remeasured until settlement date

Question 2

Groups

Answer 2

Subsidiary:
Dr: EE benefits
Cr: Equity

Parent:
Dr: Investment in sub
Cr: SBP reserve

Dr: Equity
Cr: Investment in Sub

Consolidated JE:
DR Equity
DR EE benefits
CR Investment in sub

Question 3

General notes: IFRS 2

Answer 3

• no calculations at inception
• On expected number expect to remain
• Cash SBP —> SAR
• Equity settled, the FV does not change, use the one form inception
• Modification is difference in price
• If there is no obligation ito SAR it is equity settled

Dr Staff cost (p/l)
Cr Share option received (SCE)

Dr Bank (actual cash received)
Dr Share option reserve (SCE)
Cr Share Capital
Cr RE

• If there is no vesting there is no recognition
• Cash settled linked to share price