SHARE-BASED

PAYMENT
Comparison for Full PFRs, PFRS for SMEs, PFRs for SEs

Prepared by:
Postrano, Rigel C.
Quiñones, Evan Lloyd A.
Ramayla, Aljhon D.
Share-based
Payment
IFRS 2 Share-based payment requires an entity to
recognize share-based payment transactions (such as
granted shares, share options, or share appreciation rights)
in its financial statements, including transactions with
employees or other parties to be settled in cash, other
assets, or equity instruments of the entity.
SHARE-BASED PAYMENT
TRANSACTIONS

Equity-settled share-based
payment transactions
The entity acquires goods or
services as consideration
for equity instruments of
the entity.
SHARE-BASED PAYMENT
TRANSACTIONS
Cash-settled share-based
payment transactions
The entity acquires goods or services by
incurring liabilities to the supplier of
goods or services for amounts that are
based on the price of the entity’s equity
instruments.
Financial Reporting Frameworks - COMPARED

Full PFRS PFRS for SMEs PFRS for SEs

PFRS 2 Section 26 Section 20
01
SCOPE
 Scope
FULL PFRS PFRS for SMEs PFRS for SEs
An entity shall apply this IFRS in
accounting for all share-based payment
transactions, whether or not the entity can
identify specifically some or all of the goods
or services received, including: Same as Full PFRS Same as Full PFRS
a.) equity-settled share-based payment
transactions,
b.) cash-settled share-based payment
transactions, and
c.) transactions in which the entity receives
or acquires goods or services and the terms
of the arrangement provide either the entity
or the supplier of those goods or services
with a choice of whether the entity settles
the transaction in cash (or other assets) or
by issuing equity instruments.
 02
RECOGNITION
AND
MEASUREMENT
Recognition and Measurement
Full PFRS PFRS for SMEs PFRS for SEs
• The goods or services received or acquired
in a share-based payment transaction are Same as Full PFRS and
recognized when the entity obtains the PFRS for SMEs except for
goods or receives the services. measurement of equity-
• The entity also recognizes a corresponding
increase in equity if the goods or services
settled awards – the value
were received in an equity-settled share- of goods or services
based payment transaction or a liability if the Same as Full PFRS acquired must be
goods or services were acquired in a cash- recognized with reference
settled share-based payment transaction. to the net asset value (total
• When the goods or services received do not assets less liability divided
qualify for recognition as assets they are by total number of
recognized as an expense.
• Equity-settled awards are recognized at fair
shares outstanding at
value of goods of services, or fair value of measurement date) of the
shares, if indeterminable. entity.
 03
MEASUREMENT-
EQUITY SETTLED
Measurement – Equity Settled
Full PFRS
Transactions are measured
at fair value of the goods or
services received.
If the entity cannot
estimate reliably these fair
values, which is deemed
always to be the case for
transactions with employees,
the transactions are measured
at the fair value of the equity
instruments granted, ignoring
any service or non-market
vesting.
PFRS for SMES PFRS for SEs
Transactions in respect of
goods or services received Transactions are measured
from non-employees are at net asset value (total assets
measured at fair value of the less liability divided by total
goods or services received. If number of shares outstanding
the entity cannot estimate at measurement date) of the
reliably these fair values, the entity.
transactions are measured at
the fair value of the equity
instruments granted, ignoring
any service or non-market
vesting conditions.
Transactions with employees
are measured at the fair value
of the instruments granted,
ignoring any service or non-
market vesting conditions.
Measurement – Equity Settled (Continuation)
Full PFRS PFRS for SMES PFRS for SEs
A three-tier hierarchy is applied
when measuring the fair value of
the equity instruments:
1. Use of observable market
prices.
2. Use of specific observable
market data, such as a recent
transaction in the entity’s shares or
a recent independent fair valuation
of the entity.
3. Use of a generally accepted
valuation technique that uses
market data to the greatest extent
practicable (directors use their
judgment to apply the most
appropriate valuation method to
determine the fair value of the
entity’s shares). A corresponding
increase in equity is recognized.
 04
Share Option –
Measurement and
Recognition of
Compensation
 Full PFRS PFRS for SMEs PFRS for SEs

Fair value on the date of The share options must be The share options must be
grant, if not measured measured at fair value on measured at net asset value
reliably, intrinsic value is the date of grant. (book value per share) on
used.
the date of grant.
Intrinsic value is the
The intrinsic value of share
excess of the market price
of the share over the option options is not mentioned as
price. an alternative.

Measurement- Share Option

 Full PFRS PFRS for SMEs PFRS for SEs

Vest immediately - The employee

is not required to complete a
specified period of service before
unconditionally entitled to the share
options. In this case, on grant date, Same as Full PFRS Same as Full PFRS
the entity shall recognize the
compensation as expense in full
with corresponding increase in
equity.

Does not vest until the employee

completes a specified service
period, the compensation is
recognized as expense over the
vesting period.

Recognition of Compensation - Share Option

05 Share

MEASUREMENT –
Appreciation
Right
– is an example

CASH SETTLED of cash-settled

share-based
payment
Measurement- Cash Settled
Full PFRS PFRS for SMEs PFRS for SEs
Cash-settled share-based
Same as Full PFRS Same as Full PFRS
payment transactions are measured
at the fair value of the liability. Until
the liability is settled, the fair value of
the liability is re-measured at each
reporting date and at the date of final
settlement, with any changes in fair
value recognized in profit or loss.

The fair value of liability is equal

to the excess of the market value of
share over a predetermined price for
a given number of shares during a
definite vesting period.
Recognition of Compensation - Cash Settled
Full PFRS PFRS for SMEs PFRS for SEs

Vest immediately – The

Same as Full PFRS Same as Full PFRS
compensation is recognized as
expense immediately on the
date of grant.

Does not vest until the

employee completes a definite
vesting period, the
compensation is recognized as
expense over the vesting
period.
 06
Share based
transaction
with cash
alternative
Share-based payment transaction may give either the entity or the
counterparty a choice of settling the transaction in cash or by
transfer of equity instrument.
Share-based transaction with cash alternative
Full PFRS PFRS for SMEs PFRS for SEs
As a rule, the entity shall account for the
transaction as a cash-settled share-based
payment transaction.

However, the entity shall account for the

transaction as equity settled share-based
payment when:
Same as Full PFRS Same as Full PFRS
a. The entity has a past practice of
settling by issuing equity instrument.

a. The option has no commercial

substance because the cash settlement
amount bears no relationship to and is
likely to be lower than the fair value of
the equity instrument.
07
Modification
 Full PFRS PFRS for SMEs PFRS for SEs
• If the fair value of the new
instruments is more than the fair
value of the old instruments (e.g. by
reduction of the exercise price or
issuance of additional instruments),
the incremental amount is
recognized over the remaining
vesting period in a manner similar to Same as Full PFRS Same as Full PFRS
the original amount.
• If the modification occurs after the
vesting period, the incremental
amount is recognized immediately.
• If the fair value of the new
instruments is less than the fair value
of the old instruments, the original
fair value of the equity instruments
granted should be expensed as if the
modification never occurred.

Modification
 08
Cancellation
and
Settlement
Cancellation and Settlement
Full PFRS PFRS for SMEs PFRS for SEs

The entity shall account Same as Full PFRS Same as Full PFRS
for the cancellation or
settlement as an
acceleration of vesting and
shall therefore recognize
immediately the amount
that otherwise would have
been recognized for
services received over the
remainder of the vesting
period.
09
Group Plans
 Full PFRS
The entity receiving the goods
or services shall measure the
goods or services received as
either an equity-settled or a cash-
settled share-based payment
transaction by assessing:
(a) the nature of the awards
granted, and
(b) its own rights and obligations.
The amount recognized by
the entity receiving the goods or
services may differ from the
amount recognized by the
consolidated group or by another
group entity settling the share-
based payment transaction
PFRS for SMEs PFRS for SEs
If a share-based payment
award is granted by a parent
entity to the employees of one or
more subsidiaries in the group,
and the parent presents
consolidated financial statements
using either the full IFRS/PFRS
or IFRS/PFRS for SME, such Same as PFRS for SMEs
subsidiaries are permitted to
recognize and measure share-
based payment expense (and the
related capital contribution by the
parent) on the basis of a
reasonable allocation of the
expense recognized for the
group.
Group Plans
 10
Disclosure
 Full PFRS PFRS for SMEs PFRS for SEs
Required disclosures include:
• the nature and extent of Same as Full PFRS Same as Full PFRS and PFRS
share-based payment for SMEs but does not include
arrangements that existed equity-settled share-based
during the period. payment arrangements.
• how the fair value of the
goods or services received, or
the fair value of the equity
instruments granted, during the
period was determined.
• the effect of share-based
payment transactions on the
entity's profit or loss for the
period and on its financial
position.

Disclosure
End