Cima F2 Exam Question No 29

Question No 29:

Cash-settled share-based payments measure?

• Until the liability is settled, the entity remeasures the fair value of the liability at each reporting date and then at the date of settlement. Notice that this is different from accounting for equity share-based payments, where the fair value is fixed at the grant date.
• Changes in fair value are recognized in profit or loss for the period.
• Where services are received, these are recognized over the period that the employees render the services. (This is the same principle as for equity-settled transactions).
• The expense recognized in each accounting period has a double entry to a provision/liability account.
• Dr P/L
• Cr Liability
• On the vesting date, the amount of the liability should equal the cash to be paid.