Search within this section
Select a section below and enter your search term, or to search all click IFRS and US GAAP: similarities and differences
Favorited Content
4.19 Group share-based payment transactions
Publication date: 30 Nov 2022
us IFRS & US GAAP guide
Under US GAAP, push-down accounting of the expense recognized at the parent level generally would apply. Under IFRS, the reporting entity’s obligation will determine the appropriate accounting.
US GAAP | IFRS |
Generally, push-down accounting of the expense recognized at the parent level in the consolidated financial statements would apply to the separate financial statements of the subsidiary.
For liability-classified awards settled by the parent company, the mark to market expense impact of these awards should be pushed down to the subsidiary’s books each period, generally as a capital contribution from the parent. However, liability accounting at the subsidiary may be appropriate, depending on the facts and circumstances.
| For the separate financial statements of the subsidiary, equity or liability classification is determined based on the nature of the obligation each entity has in settling the awards, even if the award is settled in parent equity.
The accounting for a group cash-settled share-based payment transaction in the separate financial statements of the entity receiving the related goods or services when that entity has no obligation to settle the transaction would be as an equity-settled share-based payment. The group entity settling the transaction would account for the share-based payment as cash-settled.
The accounting for a group equity-settled share-based payment transaction is dependent on which entity has the obligation to settle the award.
For the entity that settles the obligation, a requirement to deliver anything other than its own equity instruments (equity instruments of a subsidiary would be “own equity” but equity instruments of a parent would not) would result in cash-settled (liability) treatment. Therefore, a subsidiary that is obligated to issue its parent’s equity would treat the arrangement as a liability, even though in the consolidated financial statements the arrangement would be accounted for as an equity-settled share-based payment. Conversely, if the parent is obligated to issue the shares directly to employees of the subsidiary, then the arrangement should be accounted for as equity-settled in both the consolidated financial statements and the separate standalone financial statements of the subsidiary.
|
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
Link copied
