(a) IFRS 2 – Share-based Payment – defines a share-based payment transaction as one in which an entity receives goods or services from a third party (including an employee) in a share-based payment arrangement. A share-based payment arrangement is an agreement between an entity and a third party which entitles the third party to receive either:

– Equity instruments of the entity (equity-settled share-based payments); or
– Cash or other assets based on the price of equity instruments of the entity (cash-settled share-based payments).

Share-based payment arrangements are often subject to vesting conditions which must be satisfied over a vesting period.

Required:
For both cash-settled AND equity-settled share-based payment arrangements, explain:
(i) The basis on which the arrangements should be measured; 
(ii) The criteria which are used to allocate the total value of the arrangement to individual accounting periods;
(iii) The accounting entries (debit and credit) required during the vesting period. (6 marks)