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IFRS 2 Amendments - Share-based Payments: Vesting Conditions and Cancellations


The objective of the project is to amend IFRS 2 Share-based Payment to clarify the definition of vesting conditions and provide guidance on the accounting treatment of cancellations by parties other than the entity.

At present, IFRS 2 describes vesting conditions as including service conditions and performance conditions but is silent on whether other features of a share-based payment transaction are vesting conditions. IFRS 2 also specifies the accounting treatment when an entity cancels a grant of equity instruments. However, it does not state how cancellations by a party other than the entity should be accounted for.

The International Financial Reporting Interpretations Committee (IFRIC) considered these issues in its draft Interpretation D11 Changes in Contributions to Employee share Purchase Plans, which was published for comment in December 2004. However, the IFRIC was unable to reach a consensus and the issues were referred to the Board.

The Board agreed that these issues should be clarified and proposes the following amendments:

Vesting conditions are restricted to service conditions and non-market performance conditions; Cancellations by parties other than the entity will be accounted for in the same way as cancellations by the entity (paragraph 28 of IFRS 2). The amendments will be applied retrospectively in annual periods beginning on or after 1 January 2009.

The final Amendments to IFRS 2 were issued in January 2008 and published in the Official Journal in December. They became effective from 1 January 2009.
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