Share Based Payments

International Financial Reporting Standard IFRS2/FRS20, which is effective from
1 January 2005 provides the accounting framework for all "Share Based Payments". For most companies the practical consequence of IFRS2/FRS20 is a requirement to calculate and report on the cost of employee share option plans.

Broadly, the new accounting standard requires companies to account for share options from the day they are granted, with the cost being recognised as an expense over the period to vesting. In practice, the calculation of the fair value of an option can require complex option pricing models. In many cases these models need to be customised to meet individual company needs.

LCP can provide expertise and models for the assessment of fair value, and assistance with the detailed disclosure requirements.

This article on Share Based Payments which appeared in the October 2005 issue of Accountancy Ireland has more details.

Contact us for further information.