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SFAS
39 Share-based Payment |
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 Status |
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Issued by the Financial Accounting Standards Committee In Taiwan on
23 August 2007 |
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Summary |
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The purpose of this Statement is to establish the accounting
standards for a share-based payment transaction. In particular, it
requires an entity to reflect in its financial statements the
effects of share-based payment transactions, including transactions
with employees or other parties to be settled in cash, other assets,
or equity instruments of the entity. This also applies to transfers
of equity instruments of the entity’s parent, or equity instruments
of another entity in the same group as the entity, to parties that
have supplied goods or services to the entity. |
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 Three
types of share-based payment transactions |
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The Statement sets out measurement principles and specific
requirements for three types of share-based payment transactions: |
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(a) equity-settled share-based payment transactions, in which the
entity receives goods or services as consideration for equity
instruments of the entity (including shares or share options); |
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(b) cash-settled share-based payment transactions, in which the
entity acquires goods or services by incurring liabilities to the
supplier of those goods or services for amounts that are based on
the price (or value) of the entity’s shares or other equity
instruments of the entity; and |
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(c) transactions in which the entity receives or acquires goods or
services and the terms of the arrangement provide either the entity
or the supplier of those goods or services with a choice of whether
the entity settles the transaction in cash or by issuing equity
instruments. |
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Accounting
for equity-settled share-based payment transactions |
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When an entity takes a share-based payment transaction with
non-employees, the entity is required to measure the goods or
services received, and the corresponding increase in equity at the
fair value of the goods or services received, at the receiving date,
unless that fair value cannot be estimated reliably. If the entity
cannot estimate reliably the fair value of the goods or services
received, the entity is required to measure their value, and the
corresponding increase in equity by reference to the fair value of
the equity instruments granted. |
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When an entity takes a share-based payment transaction with
employees and others providing similar services, the entity is
required to measure the fair value of the equity instruments
granted, because it is typically not possible to estimate reliably
the fair value of employee services received. The fair value of the
equity instruments granted is measured at grant date. |
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For goods or services measured by reference to the fair value of the
equity instruments granted, the market condition, but no other
vesting conditions, is taken into account when estimating the fair
value per share or option at the relevant measurement date. Vesting
conditions, other than market conditions, are taken into account by
adjusting the number of equity instruments included in the
measurement of the transaction amount so that, ultimately, the
amount recognized for goods or services received as consideration
for the equity instruments granted is based on the number of equity
instruments that eventually vest. Hence, on a cumulative basis, no
amount is recognized for goods or services received if the equity
instruments granted do not vest because of failure to satisfy a
vesting condition (other than a market condition). The statement
requires the fair value of equity instruments granted to be based on
market prices, if available, and to take into account the terms and
conditions upon which those equity instruments were granted. In the
absence of market prices, fair value is estimated, using a valuation
technique to estimate what the price of those equity instruments
would have been on the measurement date in an arm’s length
transaction between knowledgeable, willing parties. If fair value of
equity instruments cannot be estimated, the intrinsic value would be
continuingly used until the transaction is settled. |
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If the terms and conditions of an option or share grant are modified
or if a grant is cancelled, repurchased or replaced with another
grant of equity instrument, the entity should recognize, as a
minimum, the services received measured at the grant date fair value
of the equity instruments granted. The incremental cost will be
recognized in an amount equal to the excess of the fair value of the
modified grant over the fair value of the original grant immediately
before the modification. |
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Accounting
for cash-settled share-based payment transactions |
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When an entity takes a cash-settled share-based payment transaction,
the entity should measure the goods or services acquired and the
liability incurred at the fair value of the liability. Until the
liability is settled, the entity is required to remeasure the fair
value of the liability at each reporting date and at the date of
settlement, with any changes in value recognized in profit or loss
for the period. |
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Accounting
for a choice of cash-settled share-based payment or equity-settled
share-based payment |
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For share-based payment transactions in which the terms of the
arrangement provide either the entity or the supplier of goods or
services with a choice of whether the entity settles the transaction
in cash or by issuing equity instruments, the entity is required to
account for that transaction, or the components of that transaction,
as a cash-settled share-based payment transaction if, and to the
extent that, the entity has incurred a liability to settle in cash
(or other assets), or as an equity-settled share-based payment
transaction if, and to the extent that, no such liability has been
incurred. |
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This statement also specifies disclosures about share based payment
transactions. |
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Effective
date
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This statement becomes effective for financial statements for the
fiscal year beginning on or after 1 January 2008. |
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