Ind AS 102 Share-based Payment Accounting for Cancellation of Equity Settled Options

May 8, 2026

This document outlines the accounting treatment for the cancellation of equity-settled share-based payment options under Ind AS 102. When an entity cancels or settles equity instruments, it is treated as vested to all current employees on the date of cancellation. Consequently, the entire remaining unrecognized expense is recognized immediately. The document details a four-step process for accounting for the cancellation of these options. Step 1 involves recognizing the full remaining expense on the date of cancellation by debiting Employee Benefit Expenses and crediting the Share Based Payment Reserve. Step 2 focuses on converting the Share Based Payment Reserve into a Share Based Payment Liability at the fair value of the option on the cancellation date. Step 3 addresses the reclassification of the remaining balance of the Share Based Payment Reserve to retained earnings, by debiting the reserve and crediting General Reserve (R/E). Step 4 pertains to the discharge of the actual compensation at the promised amount, which may differ from the fair value of the option, and transferring the difference to profit and loss. This involves debiting the Share Based Payment Liability and Profit and Loss (for the difference), and crediting Bank (for compensation paid) and Profit and Loss (for the difference). The content emphasizes that any difference between the actual compensation paid and the fair value of the option is recognized in the profit and loss account.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages10

Reading Time25 min

AccessFree to download

May 8, 2026

Upload by Theodore