On 1 July 2012 Chester Ltd granted an executive director a choice between receiving a cash payment equivalent to 5000 shares or receiving 6000 shares.The grant is conditional upon the director being under the employ of the entity for 3 years.What is the accounting treatment for this share-based payment arrangement that is consistent with AASB 2?
A) similar treatment with cash-settled transactions
B) similar treatment with equity-settled transactions
C) similar to a compound financial instrument
D) recognise salaries benefit expense at vesting date

Question

Quizplus · Accepted Answer

This arrangement is similar to a compound financial instrument because it contains both a cash-settled component (the option to receive a cash payment equivalent to 5000 shares) and an equity-settled component (the option to receive 6000 shares). According to AASB 2, such arrangements should be accounted for by separating the equity and cash components and accounting for each part accordingly.

On 1 July 2012 Chester Ltd Granted an Executive Director