Under IFRS 2,with respect to choice-of-settlement share-based payments,if it is the entity that has the right to choose between equity settlement and cash settlement,when must the entity choose the cash settlement?
A)if the supplier provides services
B)if the supplier provides goods
C)if the entity has a present obligation to settle in cash
D)The entity always has the option to choose either method.

Question

Quizplus · Accepted Answer

The entity must choose cash settlement if it has a present obligation to settle in cash, such as when the share-based payment is a liability settled in cash (e.g. cash-settled SARs) or the terms of the arrangement require the entity to withhold taxes on behalf of the supplier. Otherwise, the entity has the choice to settle the share-based payment in equity or cash, depending on the terms of the arrangement and the entity's objectives. The choice should be made at grant date, and any subsequent changes in the fair value of the share-based payment should be accounted for in accordance with IFRS 2.

Under IFRS 2,with Respect to Choice-Of-Settlement Share-Based Payments,if It Is