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IFRS 2 and IFRIC 11 addresses group equity-settled share-based payments arrangements and how such arrangements ought to be accounted for. The ED intends to clarify whether group cash-settled arrangements are share-based payment arrangements and how those arrangements should be accounted for.
EFRAG is concerned with the way the IASB is proposing to address the issues and would prefer to amend the definitions of IFRS 2 rather than its scope. The amendments proposed do not address how the entity that provides the cash payments should account for the arrangements, EFRAG notes.
EFRAG is also concerned that the language and some of the proposed accounting requirements assume that it will be a parent entity that is making the cash payments and a subsidiary that will be receiving the goods or services. In some cases the roles might be reversed, and in other cases two subsidiaries might be involved. However, the accounting by an entity for the arrangements as a capital contribution from another group entity might not always be appropriate, especially if the arrangements are transactions between two or more subsidiary entities and do not involve a parent making the payments and a subsidiary receiving the goods or services.