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Exposure Draft Classification and Measurement of Share-based Payment Transactions: Proposed Amendments to IFRS 2
Mar 06, 2015

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Dear Sir

Exposure Draft Classification and Measurement of Share-based PaymentTransactions:
Proposed Amendments to IFRS 2

Crowe Horwath International is pleased to respond to the International Accounting Standards Board Exposure Draft Classification and Measurement of Share-based PaymentTransactions: Proposed Amendments to IFRS 2. Our detailed responses are below. We welcome the proposed amendments, as they are sensible clarifications that will assist with the understanding and application of the Standard.

Question 1

The IASB proposes to clarify that accounting for the effects of vesting and non-vesting conditions on the measurement of a cash-settled share-based payment should follow the approach used for measuring equity-settled share-based payments in paragraphs 19-21A of IFRS 2. Do you agree? Why or why not? The change ensures consistency in the accounting between cash and equity-settled share based payments and is a sensible clarification.

Question 2

The IASB proposes to specify that a share-based payment transaction in which the entity settles the share-based payment arrangement net by withholding a specified portion of the equity instruments to meet the statutory tax withholding obligation should be classified as equity-settled in its entirety. This is required if the entire share-based payment transaction would otherwise have been classified as an equity-settled share-based payment transaction if it had not included the net settlement feature. Do you agree? Why or why not? Theoretically this would appear to have two elements, the tax payment, which is cash-settled 2 and the equity-element and hence the accounting does not seem to follow commercial reality. However, and as expressed in the Basis for Conclusions, to treat the transaction in this way could be burdensome and complex for entities. As a practical expedient the position adopted would therefore seem sensible.

Question 3

The IASB proposes to specify the accounting for modifications to the terms and conditions of a cash-settled share-based payment transaction that results in a change in its classification from cash-settled to equity-settled. The IASB proposes that these transactions should be accounted for in the following manner: a) The share-based payment transaction is measured by reference to the modification-date fair value of the equity instruments granted as a result of the modification; b) The liability recognised in respect of the original cash-settled share-based payment is derecognised upon the modification, and the equity-settled share-based payment is recognised to the extent that the services have been rendered up to the modification date; and c) The difference between the carrying amount of the liability as at the modification date and the amount recognised in equity at the same date is recorded in profit or loss immediately. Do you agree? Why or why not? The change is consistent with the principles set out in IFRS 2 and provides a clarification of the accounting treatment for modifications to the terms and conditions of a cash –settled share-based payment transaction that changes its classification from cash to equity-settled.

Question 4

 The IASB proposes prospective application of these amendments, but also proposes to permit the entity to apply the amendments retrospectively if it has the information needed to do so and this information is available without the use of hindsight. Do you agree? Why or why not? Mandatory retrospective application could be difficult to achieve without the use of hindsight and hence the approach taken appears reasonable.

Question 5

 Do you have any other comments on the proposals? We have no further comments. We would be pleased to discuss further any of the matters raised. We look forward to seeing the progression of the proposed amendments.

  

 Yours faithfully,

David Chitty
International Accounting and Audit Director