In situations where an option-pricing model is required to be used to determine the fair value of equity instruments granted IFRS 2 Share-based Payment:
A) requires expected dividends to be taken into account when measuring the shares or options granted.
B) allows the entity to choose the option-pricing model it wishes to use, but contains a number of factors that the option-pricing model selected must take into account as a minimum.
C) requires the use of a binominal option-pricing model.
D) requires the use of the Black-Scholes-Merton formula.

Question

Quizplus · Accepted Answer

IFRS 2 does not mandate the use of a specific option-pricing model but allows entities to choose the model they wish to use. However, it specifies certain factors that must be considered in the model selected to ensure the fair value of the equity instruments granted is accurately determined.

In Situations Where an Option-Pricing Model Is Required to Be