This free, guided checker walks your finance team through the key decision points for IFRS 2 Share-based Payment Assessment. Answer a few questions to see the likely treatment and the evidence to document.
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
Group parent grants of parent equity to subsidiary employees are within IFRS 2 scope even when the subsidiary has no settlement obligation (IFRS 2.3A). Screen the definition first: a share-based payment exists when goods or services are received for equity instruments or for cash linked to an equity price. Watch for scope exclusions such as business combinations and financial instruments (IFRS 2.6).
The arrangement is outside IFRS 2; account for it under the applicable standard, such as IAS 19 for employee benefits or IFRS 9 for financial instruments (IFRS 2.2; IFRS 2.6).
Official guidance: IFRS issued standards
Grant date requires a shared understanding of the award terms and board or equivalent authorization; service commencement may align with grant date when no earlier communication exists. Where an award is subject to an approval process, grant date is the date approval is obtained (IFRS 2 Appendix A). If the service period begins before grant date, recognize an estimated charge from service inception and true up at grant date.
Do not recognize share-based-payment expense until grant date is established with a shared understanding of terms and any required approval (IFRS 2 Appendix A).
Official guidance: IFRS issued standards
Classification in the receiving entity's separate financial statements depends on its own settlement obligation and the instruments granted, not the parent's settlement mechanics alone. Under IFRS 2.43B the receiving entity classifies the award as equity-settled only if it is granted the entity's own equity instruments or it has no obligation to settle; otherwise it is cash-settled.
Use the interactive tool above to see how this applies to your situation.
Official guidance: IFRS issued standards
Recognize services and a liability over vesting while remeasuring the liability through profit or loss (IFRS 2.30-32). The liability is measured using an option-pricing model that reflects current terms and conditions at each reporting date (IFRS 2.33). A common error is freezing the liability at grant-date fair value as if the award were equity-settled.
Correct the measurement model so the cash-settled liability is remeasured to fair value each reporting date and at settlement through profit or loss (IFRS 2.30).
Official guidance: IFRS issued standards
Non-market vesting conditions adjust the number of awards expected to vest without remeasuring grant-date fair value; revise the service period as exit timing estimates change. For a cash-settled award, non-market conditions similarly adjust the expected outcome while the liability itself is remeasured to fair value each period (IFRS 2.19; IFRS 2.30).
Apply cash-settled accounting with fair value remeasurement each period and revise the expected vesting period for the non-market condition (IFRS 2.19; IFRS 2.30). Apply cash-settled accounting with fair value remeasurement each reporting date and at settlement through profit or loss (IFRS 2.30).
Official guidance: IFRS issued standards
Employee transactions normally use grant-date fair value with no subsequent remeasurement for equity-settled awards; select an option-pricing model suited to early exercise behaviour (IFRS 2.11; IFRS 2 Appendix B). Market conditions and non-vesting conditions are reflected in grant-date fair value, while non-market vesting conditions adjust the number expected to vest.
Complete the grant-date valuation and vesting-condition analysis before recognizing the equity-settled charge (IFRS 2.10; IFRS 2.11).
Official guidance: IFRS issued standards
Exit events adjust expected vesting and the service period without changing grant-date fair value; do not apply staged tranche accounting when exercise collapses vesting into a single event. An IPO or sale is typically a non-market performance condition, so no expense is reversed for a market movement but the number expected to vest is trued up until the event occurs (IFRS 2.19).
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Official guidance: IFRS issued standards
Group recharge arrangements do not automatically determine IFRS 2 classification; the receiving entity records a capital contribution from the parent for equity-settled group awards (IFRS 2.43B). Analyze the receiving entity, the settling entity, and the consolidated group separately, because their entries can differ.
Apply equity-settled accounting, recognizing the grant-date fair value over the vesting period based on the number expected to vest (IFRS 2.11; IFRS 2.19).
Official guidance: IFRS issued standards
Failure to recognize ESOP expense when criteria were met at grant date may be a prior-period error requiring IAS 8 restatement rather than a change in estimate. Assess whether the information was available when the prior financial statements were authorized; if so, correct comparatives and opening equity retrospectively rather than expensing the full catch-up in the current period (IAS 8.41-42).
Apply the group share-based-payment allocation and correct the omitted expense as a prior-period error under IAS 8 (IAS 8.42; IFRS 2.43A). Apply the group share-based-payment allocation and separate-entity classification: equity-settled where the receiving entity has no settlement obligation, otherwise cash-settled (IFRS 2.43B).
Official guidance: IFRS issued standards
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