Clarifying the scope of FRS 20: Share-based Payments

UITF Abstract 41 ‘Scope of FRS 20 Share-based payments’ deals with circumstances where, because of public policy or other reasons, shares are given to individuals or entities that have either not provided goods or services or have provided them but at less than the fair value of the share-based payment.

The abstract mirrors an interpretation by the International Financial Reporting Interpretations Committee (IFRIC) in respect of IFRS 2 and applies for periods beginning on or after 1 May 2006.

Where the services or goods received in consideration for equity in an entity cannot be identified and, therefore, cannot be measured in accordance with FRS 20, the entity should measure the transaction at the fair value of the relevant financial instrument. In addition, where the consideration is identifiable but appears to be at less than the fair value of the equity instruments, the abstract concludes that other consideration has been received. The identifiable element should continue to