Ind AS 102: Share-Based Payment Accounting Treatment 29 Oct 2026 What Is Ind AS 102? Ind AS 102, Share-based Payment, prescribes the accounting treatment for transactions in which a company receives goods or services in exchange for its equity instruments, such as shares or stock options, or incurs liabilities based on the value of its shares. Types of Share-Based Payment Transactions Equity-settled: The company compensates employees by granting shares or stock options. Cash-settled: The company pays cash based on the value of its shares, such as through stock appreciation rights. Choice of settlement: The transaction allows settlement in cash or equity instruments, subject to the applicable accounting requirements. Accounting Treatment Under Ind AS 102 Equity-settled transactions: Measure employee services using the grant-date fair value of the equity instruments, where applicable. Recognize the expense over the vesting period, with a corresponding increase in equity. Cash-settled transactions: Recognize employee services and a corresponding liability. Measure the liability at fair value at each reporting date and at settlement, recognizing changes in fair value in profit or loss. Practical Example: Ind AS 102 Employee Stock Options Scenario: A company grants 120 stock options to an employee. Each option has a grant-date fair value of ₹60. The employee must complete three years of service to receive the options. Assume all options are expected to vest and the employee completes the required service. Step 1: Calculate the Total Compensation Expense Total expense = Number of options × Fair value per option = 120 × ₹60 = ₹7,200 Step 2: Calculate the Expense for Each Year The total expense of ₹7,200 is recognized over the three-year vesting period. Step 3: Pass the Journal Entry At the end of each year, the company records: Employee Compensation Expense A/c Dr. ₹2,400 To Share-Based Payment Reserve A/c ₹2,400 Why is this treatment required? The employee provides services over three years. Therefore, the company recognizes the total compensation cost over that period rather than recording the entire ₹7,200 in the first year. Steps to Solve Ind AS 102 Practical Problems Identify whether the transaction is equity-settled or cash-settled. Determine the grant date, fair value, vesting period, and applicable conditions. Calculate the cumulative expense or liability at the reporting date. Deduct the amount recognized in previous periods to determine the current-period expense. Pass the appropriate journal entry and account for changes in estimates or fair value.
