Accounting

Difference Between Equity Settled And Cash Settled Share Based Payment

A share-based payment is a transaction whereby an entity receives goods or services either as consideration for its equity or by incurring liabilities for the amounts based on the price of the entity’s shares or other equity instruments. Difference between equity settled and cash settled share based payment:

Equity settled share based payment transactions arise when an entity receives goods or services as consideration for its own equity instruments (including shares and share options).

Cash settled share based payment transactions arise when an entity acquires goods or receives services by incurring liabilities (debt) for amounts based on the value of its own equities.

Other share-based payment transactions may arise in which the entity receives or acquires goods or services and either the entity or the supplier has the choice of whether the transaction is settled in cash or equity instruments.

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