📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    Question

    In the case of a Cash-settled share-based payment

    where the employee’s services vest over a three-year period, how must the entity recognize and measure the transaction as per Ind AS 102?
    A The entire fair value of the liability is recognized as an expense on the Grant Date. Correct Answer Incorrect Answer
    B The liability is recognized over the vesting period and re-measured at fair value at each reporting date until settled. Correct Answer Incorrect Answer
    C The expense is recognized equally over three years based on the Grant Date fair value only. Correct Answer Incorrect Answer
    D No expense is recognized until the cash is actually paid out to the employee (Cash basis). Correct Answer Incorrect Answer
    E The transaction is treated as an equity-settled payment until the final exercise date. Correct Answer Incorrect Answer

    Solution

    Unlike equity-settled payments (where FV is fixed at grant),  Cash-settled  payments require the entity to recognize a liability. This liability must be  re-measured  at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in the  Profit or Loss  for the period. The expense is spread over the vesting period to reflect the services rendered.

    Practice Next
    More Financial System Questions
    ask-question