Accounting Alerts

Insights into PFRS 2 – new series

This accounting alert is to issue the first two articles in our new series Insights into PFRS 2 - Share-based Payments.

PFRS 2 was introduced in 2004 and the accounting principles have remained largely unchanged since. Share-based payments have become increasingly popular over the years, with many entities using equity instruments or cash and other assets based on the value of equity instruments as a form of payment to directors, senior management, employees and other suppliers of goods and services. 

The accounting of share-based payments is an area that remains not well understood and this is evidenced by a number of Interpretations and agenda decisions being issued by the IFRS Interpretations Committee (IFRIC) and Philippine Interpretations Committee (PIC). Considerable care needs to be applied in evaluating the requirements set out in PFRS 2 and other authoritative guidance to increasingly complex and innovative share-based payment arrangements.

Our ‘Insights into PFRS 2’ series is aimed at demystifying the Standard by explaining the fundamentals of accounting for share-based payments using relatively simple language and providing insights to help entities cut through some of the complexities associated with accounting for these types of arrangements. The first two articles are as follows:

  • Insights into PFRS 2: What is PFRS 2? - this article provides an overview including the objective and scope of PFRS 2
  • Insights into PFRS 2: Classification of share-based payment transactions and vesting conditions - This article explains how to determine the classification of share-based payment transactions and vesting conditions, both of which significantly impact the accounting requirements to be applied under PFRS 2