IFRS 2 Amendments - Classification and Measurement of Share-based Payment Transactions

Project History

• Accounting for cash-settled share-based payment transactions that include a performance condition: the IASB decided that the guidance of IFRS 2 for the measurement of equity-settled awards that include a performance condition should be applied by analogy.

• Share-based payments settled net of tax withholdings: the IASB decided that 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.

• Modification of a share-based payment transaction from cash settled to equity settled: the IASB decided that this should be accounted for consistently with a change in classification that arises from a modification to the terms and conditions of a share-based payment.

On 25 November 2014, the IASB published the Exposure Draft Classification and Measurement of Share-based Payment .

EFRAG's Comment Letter

EFRAG published its draft comment letter in December 2014 and its final comment letter in April 2015. 

In its comment letter, EFRAG generally agreed 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.

In relation to the second amendment in the ED, EFRAG recommended including an example to illustrate the accounting for the payment of the withholding tax, consistently with the analysis that the plan is in substance an equity-settled plan.

Finally, EFRAG expressed concerns that addressing more and more specific terms and conditions of different share-based plans was resulting in ever-increasing complexity in the requirements of IFRS. 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 Endorsement Advice

The final Amendments were published on 20 June 2016 and are applicable for periods on or after January 2018. 

EFRAG issued a draft endorsement advice letter and a separate invitation to comment relating to the endorsement for use in the EU of the Amendments on 7 October 2016.

After considering the support expressed by constituents for its preliminary assessment, EFRAG  issued its final endorsement advice letter on 14 December 2016. The letter reiterated the assessment that the Amendments satisfy the criteria for endorsement for use in the EU and that therefore EFRAG recommended their endorsement.

The final  endorsement advice can be found h​ere​.

On 27 February 2018, the Commission Regulation endorsing the Amendments was published  in the EU Official Journal.