What is Ind as 102?

IND AS 102: ‘Share-based payments’ in its actual text is considerably lengthy and very detailed.

The objective of my answer is to provide a basic understanding of what IND AS 102 is all about. Further reading of the actual text is suggested for a more detailed understanding.

IND AS 102 is the India specific version of IFRS 2 which deals with the accounting of Share-based payments. IND AS 102 and IFRS are almost similar.

It deals with the financial reporting of the share-based payment transactions entered into by an enterprise in the following cases:

1. Transactions with suppliers of goods or services that are settled by share-based payments.
2. Transactions with employees of the enterprise in nature of Employee Stock Option Plan.

Share-based payments are of three types:

• Equity settled share-based payment: It is a transaction in which an entity receives goods or services from the supplier of those goods and services (including an employee) and settles it by issuing equity instruments of the entity or its parent entity.

 Example: A business acquires an asset for Rs. 1,00,000 and makes payment by the issue of its equity shares.

• Cash settled share-based payment: It is a transaction in which an entity incurs a liability and settles the transaction by paying cash or other assets based on the price of the equity instruments of the entity or group’s entity.

Example: A business acquires an asset for Rs. 1,00,000 and makes payment in amounts of case based upon its share price.

• Share-based payment transaction with cash alternatives:- In this case,  either the entity or the counterparty has the option of settling the transaction either through with issue of equity or payment of cash by incurring liability.

Things that are not under the scope of IND AS-102

• Transactions with parties who are acting in the capacity of shareholders.
• Where a business acquires net assets of a business in case of amalgamation, joint venture etc and issues shares as consideration.

Recognition

In a share-based transaction,

• goods and services are to be recognised when the goods or services are received by the entity.
• Also, the corresponding increase in equity in equity-settled transactions or liability in the cash-settled transactions is to be recognised.

Measurement

The amount at a share-based transaction is to be recorded depending upon the type of counterparty:

1. Non-employee counter-party: The transaction will be measured based on the fair value of the goods or services received on the date when the goods or services are received.
2. Employee counter-party: The transaction is to be recorded at the fair value of the equity instruments as on the grant date because the services rendered by the employee cannot be recorded reliably.

I hope this is enough for a basic understanding of the IND AS 102.