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IFRS 2 Share based payment

IFRS 2 Share-based Payment provides guidance on the accounting treatment of equity-settled and cash-settled share-based payments.

Published February 2004. Effective 1 January 2005.

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*UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.


IFRS 2 requires share-based payments to be recognised in the financial statements at fair value, based on the value of the entity’s shares or the value of the goods and services received.

The scope of IFRS 2 includes employee share options, transactions in which shares or other equity instruments are issued in return for goods and services, and transactions where the payment amount is based the on the price of the entity’s shares.

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Recent amendments

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1. Annual improvements 2010-2012

To be applied prospectively to share-based payment transactions for which the grant date is on or after 1 July 2014. Earlier application is permitted.

The EU Regulation adopting the Annual Improvements requires that the changes to IFRS 2 are adopted, at the latest, for periods beginning on or after 1 February 2015, but does not change the text of paragraph 63B.

As part of the annual improvements 2010-2012 cycle, the IFRS 2 definitions of vesting condition and market condition are amended and definitions for performance condition and service condition are added to the standard.

2. IFRS 9 amendment to IFRS 2

Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.
IFRS 2 is amended to clarify that it does not apply to share-based payment transactions in which an entity receives or acquires goods or services under a contract within the scope of IFRS 9 / IAS 32.

3. Classification and Measurement of Share-based Payment Transactions

To be applied to annual periods beginning on or after 1 January 2018. Earlier adoption is permitted.

The following amendments are made to IFRS 2 as a result of the issue of Classification and Measurement of Share-based Payment Transactions:

  1. Guidance is added on accounting for a cash-settled share-based payment transaction that includes a performance condition; the guidance follows the same approach as that used for equity-settled share-based payments.
  2. An exception is introduced so that a share-based payment where the entity settled the share-based payment arrangement net is classified as equity-settled in its entirety as long as the share-based payment would have been classified as equity-settled had it not included the net settlement feature.
  3. Guidance is added on the accounting treatment to be applied where a cash-settled share-based payment changes to an equity-settled share-based payment as a result of modifications to the terms and conditions.
4. Amendments to References to the Conceptual Framework in IFRS Standards – amendment to IFRS 2*

Effective for annual periods beginning on or after 1 January 2020. Earlier application is permitted, if at the same time an entity also applies the amendments to other IFRS Standards.

Footnotes within IFRS 2 are updated to the definitions of equity and liabilities within the 2018 Conceptual Framework.

* Not EU endorsed as at 20 April 2018. Read more on EU endorsement.

*Not EU endorsed as at 20 April 2018 . Read more on EU Endorsement.

Current proposals

ED/2017/6 Definition of Material: Proposed amendments to IAS 1 and IAS 8 was issued in September 2017. It is proposed that IFRS 2 is amended to reflect the new definition of material.

The following interpretation refers to IFRS 2

UK reduced disclosures

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Amendments to the standard

There are no amendments to IFRS 2 in order to comply with the Companies Act and related Regulations.

Disclosure exemptions

FRS 101 paragraph 8(a) states that a qualifying entity is exempt from most of the disclosure requirements of IFRS 2. The remaining disclosure requirements require a description of the schemes and details about options exercised in the year and options outstanding at the year-end.

This exemption applies:

  • For a subsidiary company to arrangements involving the equity instruments of another group entity;
  • For an ultimate parent to arrangements involving its own equity instruments provided that its separate financial statements are provided alongside the group consolidated financial statements.

Equivalent disclosures must be made in the consolidated financial statements of the group in which the entity is consolidated.
IFRS 2 paragraphs for which exemption is available: 45(b) and 46-52.

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This page was last updated 20 April 2018

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