Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition

Chapter 33

SHARE-BASED PAYMENTS (IFRS 2)

BACKGROUND AND INTRODUCTION

This Standard applies to situations where an entity acquires or receives goods and services for equity-based payment. These goods can include inventories; property, plant, and equipment; intangible assets; and other nonfinancial assets. However, there are two exemptions to the general scope of the Standard. The first is, the issue of shares to acquire the net assets in a business combination is accounted for under IFRS 3, Business Combinations. The IFRS does not apply to share-based payment transactions that are covered by the scope of paragraphs 8 to 10 of IAS 32, Financial Instruments, Disclosure, and Presentation, or paragraphs 5 to 7 of IAS 39, Financial Instruments, Recognition, and Measurement. Thus contracts for the purchase of goods that are within the scope of IAS 32 and IAS 39 are excluded from this Standard.

Similarly, IFRS 2 does not apply to those transactions that are carried out with employees in their capacity as holders of equity shares of the entity. Thus, if the entity purchases its own shares from employees at the fair value of those shares, this transaction would be dealt with as a purchase of treasury shares and would not fall within the scope of IFRS 2 unless the price paid was in excess of the fair value, in which case that excess would be considered to be remuneration.

Another exempt situation would be where the entity makes a rights issue of shares to all shareholders, and these include ...