Equity-settled share-based payments

In this lesson

1. 0:00 Share-based payments recognition and measurement
2. 1:08 Vesting conditions and service periods explained
3. 2:19 Calculating share option expenses step by step
4. 4:03 Performance conditions and market adjustments
5. 5:06 Spark Company worked example setup
6. 6:38 Year one expense calculation walkthrough
7. 7:32 Year two with revised employee estimates
8. 8:54 Year three final vesting and equity balance

About this lesson

This video covers the fundamental principle: recognise the goods or services received at fair value, either immediately (if shares vest straight away) or spread over the vesting period if service conditions apply. You'll discover how to handle performance conditions, revise estimates at each reporting date, and work through a practical example calculating the annual expense and equity balance for employee share options over a three-year vesting period. The video walks you through the step-by-step calculation method: estimate the number of employees who will remain, multiply by options per employee and fair value at grant date, then spread the total cost across the vesting period. A worked example shows how to adjust your estimates each year as actual employee departures become known, recognising only the movement in equity as an expense rather than the full balance. By breaking the calculation into these clear stages, you'll build confidence in handling share-based payment questions that commonly appear in FR and SBR exams.

Duration: 11m