Indian Accounting Standard (Ind AS) 102 Summary
Indian Accounting Standard (Ind AS) 102, Share-based Payment requires goods or services received in a share-based payment transaction to be measured at fair value unless that fair value cannot be estimated reliably.
Equity-settled transactions with employees are generally measured based on the grant date fair value of the equity instruments granted.
Equity-settled transactions with non-employees are generally measured based on the fair value of the goods or services obtained.
For equity-settled transactions, an entity recognises a cost and a corresponding increase in equity. The cost is recognised as an expense unless it qualifies for recognition as an asset.
Initial estimates of the number of equity-settled instruments that are expected to vest are adjusted to current estimates and ultimately to the actual number of equity-settled instruments that vest unless differences are due to market conditions.
For cash-settled share-based payment transactions, the entity recognises a cost and a corresponding liability. The cost is recognised as an expense unless it qualifies for recognition as an asset. At each reporting date and at settlement date, the recognised liability is remeasured at fair value. The remeasurements are recognised in the statement of profit and loss.
While computing the number of awards to be included in the measurement of the liability arising from a cash settled share-based payment transaction, the best available estimate of the number of awards expected to vest would be considered and re-estimated on a periodic basis, where necessary, taking into account vesting conditions other than market conditions.
Modification of a share-based payment results in the recognition of any incremental fair value but not any reduction in fair value. Replacements are accounted for as modifications.
If the terms of a cash-settled share-based payment transaction are modified, with the result that it becomes an equity-settled share-based payment transaction, the liability for the original cash-settled share-based payment is derecognised. The equity-settled share-based payment is measured with reference to the fair value of the equity instruments granted as at the modification date and recognised in equity to the extent that goods or services have been received up to that date. Any difference between the carrying amount of the liability derecognised and the amount recognised in equity, is recognised in profit or loss.
Cancellation of a share-based payment results in accelerated recognition of any unrecognised expense.
Grants in which the counterparty has the choice of equity or cash-settlement are accounted for as compound instruments. Therefore, the entity accounts for a liability component and a separate equity component.
The classification of grants in which the entity has the choice of equity or cash-settlement depends on whether the entity has the ability and intent to settle in shares.
A share-based payment transaction in which the entity that receives the goods or services, the reference entity and the entity that settles the share-based payment transaction are in the same group from the perspective of the ultimate parent, is a group share-based payment transaction and is accounted for as such by both the receiving and the settling entities.
A share-based payment transaction that is settled by a shareholder external to the group is also in the scope of the standard from the perspective of the receiving entity, as long as the reference entity is in the same group as the receiving entity.
A receiving entity that has no obligation to settle the transaction accounts for the share-based payment transaction as equity-settled.
A settling entity classifies a share-based payment transaction as equity-settled if it is obliged to settle in its own equity instruments, otherwise it classifies the transaction as cash-settled.
For share-based payments with non-employees, goods are recognised when they are obtained and services are recognised over the period in which they are received.