BC200 In an equity‑settled share‑based payment transaction, the accounting objective is to recognise the goods or services received as consideration for the entity’s equity instruments, measured at the fair value of those goods or services when received. For transactions in which the entity receives employee services, it is often difficult to measure directly the fair value of the services received. In this case, the Board concluded that the fair value of the equity instruments granted should be used as a surrogate measure of the fair value of the services received. This raises the question how to use that surrogate measure to derive an amount to attribute to the services received. Another related question is how the entity should determine when the services are received.

BC201 Starting with the latter question, some argue that shares or share options are often granted to employees for past services rather than future services, or mostly for past services, irrespective of whether the employees are required to continue working for the entity for a specified future period before their rights to those shares or share options vest. Conversely, some argue that shares or share options granted provide a future incentive to the employees and those incentive effects continue after vesting date, which implies that the entity receives services from employees during a period that extends beyond vesting date. For share options in particular, some argue that employees render services beyond vesting date, because employees are able to benefit from an option’s time value between vesting date and exercise date only if they continue to work for the entity (since usually a departing employee must exercise the share options within a short period, otherwise they are forfeited).