Under IFRS 2, with respect to choice-of-settlement share-based payments, if the supplier chooses the cash settlement, the entity is deemed to have issued a compound financial instrument consisting of debt and equity.When cash is received, how does the supplier applies it?
A)Only against the equity portion
B)Apportioned between debt and equity based on relative fair market value of each component
C)Only against current year liabilities
D)Only against the debt portion

Question

Quizplus · Accepted Answer

Under IFRS 2, when the supplier chooses cash settlement for a share-based payment that was initially accounted for as a compound financial instrument (having both equity and debt components), the cash received is applied only against the debt portion. The equity component remains in equity until the obligation is settled.

Under IFRS 2, with Respect to Choice-Of-Settlement Share-Based Payments, If