Should below transaction be in the scope of IFRS 2?

Question

Theoretical question. What happens if the company sells shares to their employees when they sign the employment contract and provides the loan to finance the sale at the same time. So shares are issued and sold at Day 1 (theoretically as in practice it is a bit more complex). Then the shares are pledged against the loan. Would this be in the scope of IFRS 2 or rather treated as normal transaction not related to services ?

Answer 1

Definition of share-based payment
A share-based payment is a transaction in which the entity receives goods or services either as consideration for its equity instruments or by incurring liabilities for amounts based on the price of the entity's shares or other equity instruments of the entity. The accounting requirements for the share-based payment depend on how the transaction will be settled, that is, by the issuance of (a) equity, (b) cash, or (c) equity or cash.

So as per your description it should fall within the scope of IFRS 2

Answer 2

As for as issuance of shares are concerned, yes its falls under the ambit of IFRS 2 but giving loan and pledging shares are not falling in ambit of IFRS 2 it would be dealt in the same manner in which similiars entries being dealt