01/04/2015 - EFRAG's comment letter on the IASB's ED/2014/5 - Classification and Measurement of Share-based Payment Transactions - Proposed amendments to IFRS 2
- accounting for the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payment should follow the approach used for measuring equity-settled share-based payment;
- when an entity settles a share-based payment arrangement net by withholding a specified portion of the equity instruments to meet a statutory tax withholding obligation, the award should be classified as equity-settled in its entirety if, without the net settlement feature, the entire share-based payment would otherwise be classified as equity-settled; and
- in case of modification of a share-based payment from cash-settled to equity-settled, the award is remeasured as the proportion of the modification date fair value of the equity instruments granted; any difference between the new measurement and the liability recognised in the past for the original cash-settled plan is charged to profit or loss.
In its comment letter, EFRAG generally agrees with the IASB's assessment of the issues and with its proposed amendments to address them as it believes that they provide practical solutions that would reduce divergences in application.
However, EFRAG provides some recommendations on how to improve the drafting of the proposed amendments in the ED.
EFRAG is also concerned that addressing more and more specific terms and conditions of different share-based plans is resulting in ever-increasing complexity in the requirements of IFRS 2. Therefore, the IASB should envisage a more general review of IFRS 2 to consider all implementation issues in a principle-based way and this could be done as part of a post-implementation review of the Standard.
EFRAG's comment letter can be accessed using the following link.