IASB Issues Equity Accounting Exposure Draft
NCEO founder and senior staff member
On February 19, the International Accounting Standards Board (IASB) issued an exposure draft of its new International Financial Reporting Standard 2, Share-based Payment. The standard applies to the issuance of equity or equity-equivalent plans (such as phantom stock) to employees and other providers. The proposal does not contain any apparent surprises or significant changes from what the IASB has indicated it will do on this issue. While some people had hoped for an exemption for share purchase plans, the draft treats all equity plans alike. Equity awards must be valued at grant using a formula to estimate their present value. Companies must make adjustments for the number of shares that eventually vest by "adjusting the number of equity instruments included in the measurement of the transaction" to reflect the number that eventually vest. Cash-settled share-based payments are accounted for at grant but remeasured on each reporting date to reflect changes in value. Copies of the three-volume draft are available for $23. Email [email protected] for details.