Accounting for Share-Based Compensation under IFRS

Very Easy Employee Compensation Share-based Compensation

Share-based compensation is a frequently used form of employee compensation that involves providing employees with an equity interest in the company. This may take the form of stock options, restricted stock units (RSUs), or other equity instruments. Understanding how to account for these forms of compensation is essential for financial reporting.

Which of the following statements accurately reflects the accounting treatment of share-based compensation in accordance with IFRS?

Share-based compensation is recognized as an expense over the vesting period based on the fair value of the equity instruments at the grant date.

Share-based compensation is recognized as an expense only when the options are exercised.

Share-based compensation is not recognized in the financial statements until the employee terminates employment.

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