ABS won’t amend stock option standard

The Accounting Standards Board will
not amend
Financial
Reporting Standard (FRS) 20 (IFRS 2), covering share-based payment, when it
is applied to subsidiary companies who grant options over the equity shares of
the parent company, it has decided.

The board had stated that it would consider such an amendment to FRS 20,
following concerns that companies faced the burden of having to calculate the
cost of the share-based transaction for the subsidiary on a basis different from
that at which is was measured in the group financial statements.

But having carefully considered the issue, said such amendment would result
in a difference between FRS 20 and the international standard on which it is
based, IFRS 2, it said.

‘Although an exemption would represent a cost saving for certain companies,
it would apply only to the minority of cases where the substance of the
arrangement was a grant of options by the subsidiary itself. It would not affect
those arrangements where the grant was made by the parent; in such cases the
additional burden did not arise,’ the ASB said.

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