Interpretation and Application of UK GAAP: For Accounting Periods Commencing On or After 1 January 2015

Chapter 19Share-based Payment

1. Introduction
2. Recognition of a Share-based Payment Transaction
3. Amendments to a Share-based Payment Arrangement
4. Cancelling a Share-based Payment Arrangement
5. Group Plans
6. Disclosure Requirements

Introduction

Share-based payment arrangements have become increasingly common over the last few years in order to remunerate directors and employees. Share-based payment transactions can also be used as consideration to third parties (for example, settling a liability in the form of shares or share options). Section 26 Share-based Payment of FRS 102 deals with the accounting and disclosure requirements relating to share-based payment transactions. The section covers the following share-based payment arrangements:

1. Equity-settled share-based payment transactions. These are where the entity:
   1. Receives goods or services in exchange for its own equity instruments, which may also include share options, or
   2. Receives goods or services but has no obligation to settle the transaction with the supplier.
2. Cash-settled share-based payment transactions. These are where the company obtains goods or services and in so doing incurs a liability to the third party, which is settled by transferring cash or other assets. The amount of cash or other assets transferred to the third party is based on the price of the company's shares or other equity instruments of another group entity.
3. Transactions whereby the company receives or acquires goods or services and the arrangement offers ...