IFRIC issues Interpretation on share-based payment
12 January 2006
The International Financial Reporting Interpretations Committee (IFRIC)
*
has today issued an Interpretation—IFRIC 8 Scope of IFRS 2. The Interpretation clarifies that the accounting standard IFRS 2 Share-based Payment applies to arrangements where an entity makes share‑based payments for apparently nil or inadequate consideration.
IFRIC 8 explains that, if the identifiable consideration given appears to be less than the fair value of the equity instruments granted or liability incurred, this situation typically indicates that other consideration has been or will be received. IFRS 2 therefore applies.
Introducing IFRIC 8, Robert Garnett, IASB member and Chairman of IFRIC, said:
This Interpretation should assist preparers in those parts of the world where, for public policy or other reasons, companies give their shares or rights to shares to individuals, organisations or groups that have not provided goods or services to the company. IFRIC 8 confirms that these arrangements fall within the scope of IFRS 2, as directors would not make such arrangements if they did not expect some benefit to accrue to the company.
END
Press enquiries:
Robert Garnett, Chairman, IFRIC
Telephone: +44 (0)20 7246 6410, email: rgarnett@iasb.org
Allan Cook, IFRIC Co-ordinator
Telephone: +44 (0)20 7246 6452, email: acook@iasb.org
NOTES TO EDITORS
About the IFRIC
The IFRIC first met in February 2002. It comprises 12 voting members (all part-time) drawn from a variety of countries and professional backgrounds, and it meets about nine times a year under a non-voting chairman. The IFRIC’s principal role is to consider, on a timely basis within the context of International Financial Reporting Standards and the IASB Framework, accounting issues that are likely to receive divergent or unacceptable treatment in the absence of authoritative guidance, with a view to reaching consensus on the appropriate accounting treatment. In developing Interpretations, the IFRIC works closely with similar national interpretation committees.
About the IASB
The IASB, based in London, began operations in 2001. It is funded by contributions collected by its Trustees, the IASC Foundation, from the major accounting firms, private financial institutions and industrial companies throughout the world, central and development banks, and other international and professional organisations. The 14 IASB members (12 of whom are full-time) are drawn from nine countries and have a variety of professional backgrounds. The IASB is committed to developing, in the public interest, a single set of high quality, global accounting standards that require transparent and comparable information in general purpose financial statements. In pursuit of this objective, the IASB co-operates with national accounting standard-setters to achieve convergence in accounting standards around the world.
* The IFRIC is the interpretative arm of the International Accounting Standards Board (IASB).