In late February 2007 AASB Interpretation 11 AASB 2 – Group and Treasury Share Transactions (Interpretation 11) was issued.  Interpretation 11:

• clarifies whether certain share-based payment transactions with employees (or other suppliers of goods and services) should be classified as equity-settled or cash-settled
• specifies the accounting in a subsidiary’s financial statements for share-based payment arrangements involving equity instruments of the parent.

Interpretation 11 is effective for annual reporting periods beginning on or after 1 March 2007. Earlier application is however permitted.

A number of issues may arise when accounting for share-based payment arrangements in accordance with Interpretation 11.  This Accounting alert highlights the following issues which should be considered including:

• determining which entity has the obligation to deliver the parent’s equity instruments
• intra group reimbursement arrangements
• early adoption.

More information
For more information on this topic, see the following:
IAS Plus newsletter on IFRIC 11 (PDF 83KB)