IFRS for SMEs Employee Benefits and Share-Based Payment Flashcards

Under IFRS for SMEs, how are termination benefits recognized?

Answer: When the entity is demonstrably committed to providing termination benefits

Termination benefits are recognized when the entity is demonstrably committed to terminating employment before normal retirement or providing benefits as an offer to encourage voluntary redundancy.

Under IFRS for SMEs, profit-sharing and bonus payments are recognized as a liability when:

Answer: The entity has a present legal or constructive obligation to make such payments

A liability for profit-sharing or bonuses is recognized when the entity has a present obligation arising from past events and a reliable estimate can be made.

Under IFRS for SMEs, equity-settled share-based payment transactions are measured at:

Answer: Fair value of the equity instruments granted at the grant date

Equity-settled share-based payments are measured at the fair value of the equity instruments at the grant date and recognized over the vesting period.

Under IFRS for SMEs, cash-settled share-based payments are measured at:

Answer: Fair value of the liability remeasured at each reporting date

Cash-settled share-based payments (e.g., stock appreciation rights) are measured at the fair value of the liability at each reporting date until settled.

If a share option plan has a three-year vesting period, IFRS for SMEs requires the share-based payment expense to be recognized:

Answer: Evenly over the three-year vesting period

The expense for equity-settled share-based payments with vesting conditions is recognized over the vesting period as employees render service.

Under IFRS for SMEs, if share options are granted with no vesting conditions (immediately vested), the expense is recognized:

Answer: Immediately on the grant date

When equity instruments vest immediately, the presumption under IFRS for SMEs is that the service has already been received and the full expense is recognized at grant date.