Share based payment valuations IFRS 2
What is this?
Share-based Payment Valuations under IFRS 2 involve the valuation of equity-based compensation arrangements provided to employees or other parties as part of their remuneration package. These arrangements include employee stock options (ESOs), performance stock units (PSUs), restricted shares and other forms of share-based payments. The valuation process determines the fair value of these instruments at the grant date and recognizes the related accounting expense over the vesting period in the financial statements.
When would you need it?
Share-based Payment Valuations are essential for companies required to adhere to International Financial Reporting Standards (IFRS) and for those offering equity-based compensation to employees or other parties. Here are some scenarios where Share-based Payment Valuations become crucial:
1
Employee
Compensation:
Your company offers employee stock options as part of the compensation package to attract and retain talent. Valuing these equity instruments accurately ensures compliance with accounting standards and provides transparency in financial reporting.
2
Long-term Incentive Plans (LTIP):
Your company implements equity incentive plans to align the interests of employees with shareholders and motivate performance. Share-based Payment Valuations determine the fair value of equity awards granted under these plans and the corresponding accounting expenses to be recognized in the financial statements.
3
Financial
Reporting:
Your company is required to disclose the fair value of share-based payments granted to employees and other parties in the financial statements. Share-based Payment Valuations ensure proper measurement and disclosure of these transactions in accordance with IFRS 2 accounting requirements.