Accounting for Cancellation and Settlement of Employee Stock Option Plan under Ind AS 102
- Blog|News|Account & Audit|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 30 November, 2023
Latest from Taxmann
Para 28 of Ind AS 102, Share-Based Payment, discusses in detail the modifications to the terms and conditions on which equity instruments were granted, including cancellations and settlements. This para states that where a grant of equity instruments is cancelled or settled during the vesting period (other than a grant cancelled by forfeiture when the vesting conditions are not satisfied):
(a) the entity shall account for the cancellation or settlement as an acceleration of vesting and shall therefore recognize immediately the amount that otherwise would have been recognized for services received over the remainder of the vesting period.
(b) any payment made to the employee on the cancellation or settlement of the grant shall be accounted for as the repurchase of an equity interest, i.e. as a deduction from equity, except to the extent that the payment exceeds the fair value of the equity instruments granted, measured at the repurchase date. Any such excess shall be recognized as an expense.
This story sheds light on the above provision of the standard with the help of a case study wherein a company has withdrawn its employee share options after the completion of three years but before the vesting period of 4 years. The reason for the withdrawal of the share option is a significant fall in the market price of the share of the company due to the change in management. To know how the new management accounted for this cancellation or settlement of the stock option.
Click Here To Read The Full Story
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
CA | CS | CMA
