On 1 July 2009 Chester Ltd granted an executive director a choice between receiving a cash payment equivalent to 5,000 shares or receiving 6,000 shares.The grant is conditional upon the director being under the employ of the entity for three 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) It should be accounted for similar to a compound financial instrument.
D) Recognise salaries benefit expense at vesting date.
E) None of the given answers.

Question

Quizplus · Accepted Answer

The arrangement is a compound financial instrument because it involves a choice between cash and equity, requiring elements of both cash-settled and equity-settled accounting treatments.

On 1 July 2009 Chester Ltd Granted an Executive Director