[Paragraphs BC371-BC382 are added as a consequence of amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions issued in June 2016.]

BC371 This section summarises the Board’s considerations when it finalised its proposals to address the accounting for the effects of vesting conditions on the measurement of a cash-settled share-based payment, contained in the November 2014 ED.

BC372 The Board received a request regarding the measurement requirements in IFRS 2 for cash-settled share-based payment transactions that include a performance condition.

BC373 The Board noted that IFRS 2 requires the use of fair value as a principle in measuring share-based payment transactions. The Board observed that paragraphs 19-21A of IFRS 2 provide the requirements for measuring the fair value of equity-settled share-based payment transactions that include vesting and non-vesting conditions. The Board also observed that, in the case of cash-settled share-based payment transactions, paragraph 33 of IFRS 2 requires an entity to measure the liability, initially and at the end of each reporting period until settled, at fair value. The entity is required to apply an option pricing model, taking into account the terms and conditions on which the cash-settled share-based payments were granted and the extent to which the employees have rendered service to date.