ACCA SBR ^INT Syllabus C. Reporting The Financial Performance Of A Range Of Entities - IFRS 2 Scope - Notes ^{7 / 7}

Share-based payments can be more than just employee share options, and the trick in the exam is to know which scenarios you apply IFRS 2 to, and which you don’t…

It Applies to All Entities

There is no exemption for private or smaller entities. 

In fact, subsidiaries using their parent’s or fellow subsidiary’s equity as consideration for goods or services are within the scope of the Standard.

Goods and Services Only

 
IFRS 2 is used when shares are issued (or rights to shares given) in return for goods and services ONLY.

What does fall under IFRS 2

1. Share appreciation rights

2. Employee share purchase plans

3. Employee share ownership plans

4. Share option plans and

5. Plans where share issues (or rights to shares) depend on certain conditions

What doesn’t fall under IFRS 2

• When shares are issued to buy a subsidiary (rather than for employing the subs directors primarily).


  So, in a question, care should be taken to distinguish share-based payments related to the acquisition from those related to employee services.

• When the item is being paid for with shares is a commodity-based derivative (such as those dealing with the price of gold, oil etc.). 

  These are IFRS 9 financial instruments instead.