Equity Settled Share Based Payments made to external party other than employees by issue of equity shares as per Ind AS 102

1.      Equity Settled- Share Based Payments

S.B.P are made to external parties

For Goods

An entity recognised goods acquired in Share based transaction on the date of goods received.

An entity would recognise an expense or an asset if the goods receive meet the criteria for recognition as an asset.

An entity shall measure the goods and corresponding increase in equity at the fair value of goods in priority but in absence, we can consider the fair value of shares.

Journal Entries

 

  • If the fair value of goods acquired is known:

 

 Assets A/c                                                          Dr     (Fair Value of goods)

To Equity Share Capital                                             (Face Value of shares)

To Security Premium Reserve A/C                          (Balance Figure)

 

  • If the fair value of goods acquired is not known

Assets A/c                                                     Dr    (Balance Figure)

To Equity Share Capital                                      (Face Value of shares)

To Security Premium Reserve A/C                   (Fair value – Face value of shares)

For Services

An entity recognised services in Share-based transactions on the on allocation basis during the vesting period on S.L.M (straight Line method) basis and corresponding increase the Share-based payment reserve and after the end of the vesting period transfer to share capital A/c if vesting condition are satisfied. (for example, services recognised on monthly basis entity with a corresponding increase in Share-based payment reserve and at the end of vesting period it should be transferred to share capital A/C.)

An entity shall measure the service at the fair value of services in priority but in absence, we can consider the fair value of shares.

Journal Entries:

Services A/c                                                            Dr.                     xxxx

To Share-Based Payment Reserve A/c                                        xxxx

(Being services allocated on a monthly basis)

Monthly Basis =  Total value of shares/Vesting Period(Total month)

And after the vesting period

Share-Based Payment Reserve A/C              Dr.            xxxx

To Share Capital                                                                  xxxx

To Security Premium Reserve                                          xxxx

(Being shares issued after vesting period)

Priyansh Minocha

Priyansh Minocha is C.E.O and Director at Amonest India Private Limited and Founder at Casolutionsglobal

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