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IFRS 2 Share-Based Payment

IFRS 2 Share-based Payment was issued by International Accounting Standards Board (IASB) in 2004 and has been effective since January 1, 2005.

IFRS 2 requires an entity to recognise share-based payment transactions in its financial statements, including transactions with employees or other parties to be settled in cash, other assets, or equity instruments of the entity. IFRS encompasses the issuance of shares, or rights to shares, in return for services and goods. IFRS applies to all entities. There is no exemption for private or smaller entities.

IFRS 2 sets out measurement principles and specific requirements for three types of share-based payment transactions:

  • Equity-settled share-based payment transactions, in which the entity receives goods or services as consideration for equity instruments of the entity (including shares or share options)
  • Cash-settled share-based payment transactions, in which the entity acquires goods or services by incurring liabilities to the supplier of those goods or services for amounts that are based on the price (or value) of the entity's shares or other equity instruments of the entity; and
  • Share-based payment transactions with cash alternatives 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 by issuing equity instruments.

Companies are required to take the following action steps for each share-based payment measured under IFRS 2.

  • Calculate the fair value of the share-based payment at the date of grant.
  • For cash-settled share-based payments, determine the fair value of the share-based payment at each reporting date.
  • Calculate the expense for each period based on the company's revised estimate of shares that will vest.
  • Develop a system or program to capture the data necessary for fulfilling the disclosre requirements.


We hope that this information will assist you, but it should not be used or relied upon as a substitute for your own independent research. For a more comprehensive view of the standards/requirements, please visit the respective issuer's website.