Document ID: chunk:federal_register_of_legislation:F2022C00493:reg:3:p1
Version: federal_register_of_legislation:F2022C00493
Segment Type: reg
Provision Reference: reg 3 (pt 1/2)
Character Range: 197630–216020

3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Remuneration expense for year: (10,000 shares × CU33 × 3/3) –
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       CU220,000                                                                110,000(a)  26,667     83,333
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Adjust liability to closing fair value: (CU166,667 + CU83,333) –
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       (CU22 × 10,000 shares)                                                   (30,000)               (30,000)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Total                                                                    300,000     80,000     220,000
    (a) Allocated between liabilities and equity, to bring in the final third of the liability based on the fair value of the shares as at the date of the modification.

IG15A If a share-based payment has a non-vesting condition that the counterparty can choose not to meet and the counterparty does not meet that non-vesting condition during the vesting period, paragraph 28A of the Standard requires that event to be treated as a cancellation. Example 9A illustrates the accounting for this type of event.

IG Example 9A
Share-based payment with vesting and non-vesting conditions when the counterparty can choose whether the non-vesting condition is met
Background
An entity grants an employee the opportunity to participate in a plan in which the employee obtains share options if he agrees to save 25 per cent of his monthly salary of CU400 for a three-year period. The monthly payments are made by deduction from the employee's salary. The employee may use the accumulated savings to exercise his options at the end of three years, or take a refund of his contributions at any point during the three-year period. The estimated annual expense for the share-based payment arrangement is CU120.
After 18 months, the employee stops paying contributions to the plan and takes a refund of contributions paid to date of CU1,800.
Application of requirements
There are three components to this plan: paid salary, salary deduction paid to the savings plan and share-based payment. The entity recognises an expense in respect of each component and a corresponding increase in liability or equity as appropriate. The requirement to pay contributions to the plan is a non-vesting condition, which the employee chooses not to meet in the second year. Therefore, in accordance with paragraphs 28(b) and 28A of the Standard, the repayment of contributions is treated as an extinguishment of the liability and the cessation of contributions in year 2 is treated as a cancellation.

YEAR 1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Expense                                    Cash               Liability  Equity
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     CU                  CU                CU              CU
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Paid salary                                3,600
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  (75% × 400 × 12)              (3,600)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Salary deduction paid to the savings plan  1,200
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  (25% × 400 × 12)                                (1,200)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Share-based payment                                           120                                                   (120)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Total                                                         4,920               (3,600)           (1,200)         (120)

YEAR 2
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Paid salary                                4,200
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  (75% × 400 × 6
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  + 100% × 400 × 6)             (4,200)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Salary deduction paid to the savings plan  600
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  (25% × 400 × 6)                                 (600)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Refund of contributions to the employee                                           (1,800)           1,800
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Share-based payment
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       (acceleration of remaining expense)        240
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  (120 × 3 – 120)                                                   (240)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Total