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Introduction

The accounting requirements for Share Based Payment (SBP) arrangements are set out in the International Accounting Standards (IFRS 2) and the corresponding UK standard FRS 102, s 26.

Under previous UK Generally Accepted Accounting Practices (GAAP), smaller companies which were applying the Financial Reporting Standard for Smaller Entities (FRSSE) were not required to account for equity-settled share-based payment arrangements. However, the accounting requirements for SBP arrangements now apply to all companies for periods commencing on or after 1 January 2016 except for the very smallest UK companies that choose to apply FRS 105 “The Financial Reporting Standard applicable to the Micro-entities Regime”, January 2022. The underlying principles in respect of SBP accounting under FRS 102 are similar but not identical to those under FRS 20 (the previous UK standard for SBP arrangements).

The principal feature of share-based payment arrangements is that shares are provided in return for other assets, goods or services. Such arrangements have accounting implications even where no cash changes