In accordance with the "Basic Standards of Accounting Standards for Business Enterprises," the Ministry of Finance issued Accounting Standard No. 11—Share-Based Payment on 2006/2/15, effective as of 2007/1/1.
1. Overview of Guidelines
Share-based payment refers to a transaction in which an entity grants equity instruments or assumes liabilities based on equity instruments in exchange for services received from employees and other parties.
Share-based Payment Classification
- • Equity-settled share-based paymentTransactions in which an entity settles for services by issuing shares or other equity instruments
- • Cash-settled share-based paymentA transaction in which an entity incurs an obligation to deliver cash or other assets for services received, based on share-based or other equity instruments.
Key Dates
- • Grant DateDate of approval of the share-based payment agreement
- • Waiting PeriodThe period during which vesting conditions are met
- • Vesting DateThe date when vesting conditions are satisfied and employees or other parties have the right to receive equity instruments or cash from the enterprise.
- • Exercise DateThe date on which employees and other parties exercise their rights to receive cash or equity instruments
II. Equity-Settled Share-Based Payments
Share-based payments settled in equity for services provided by employees shall be measured at the fair value of the equity instruments granted.
Vested and exercisable immediately
Recognize the fair value of the equity instruments as cost or expense on the grant date and increase additional paid-in capital accordingly.
Vesting is contingent upon completing the service period or meeting specified performance conditions.
On each balance sheet date during the vesting period, recognize the services received in the current period as costs or expenses and credit capital reserve, based on the best estimate of the number of equity instruments expected to vest and using their fair value at the grant date.
III. Cash-Settled Share-Based Payments
Share-based payments settled in cash shall be measured at the fair value of the liability incurred by the entity, calculated on the basis of shares or other equity instruments.
Key Accounting Considerations
- • Immediately exercisable upon grant: Recognize the fair value of the liability assumed by the enterprise as a cost or expense on the grant date, with a corresponding increase in liabilities.
- • For awards that vest only after service is rendered during the vesting period or specified performance conditions are met: At each balance sheet date within the vesting period, recognize the cost or expense and corresponding liability based on the fair value of the obligation assumed by the enterprise for the services received in that period.
- • At each balance sheet date prior to settlement and on the settlement date, re-measure the liability at fair value, with changes recognized in profit or loss for the period.
4. Disclosure Requirements
Information that enterprises shall disclose in the notes
- • Total equity instruments granted, exercised, and forfeited in the current period
- • Range of exercise prices and remaining contractual term for outstanding share options or other equity instruments at the end of the period
- • Weighted average price of share options or other equity instruments exercisable in the current period, calculated using the exercise date price
- • Method for Determining the Fair Value of Equity Instruments
- • Impact of share-based payment transactions on current financial position and operating results
Regulatory Document Attachment
IFRS 11 — Share-Based Payment (PDF)