Answered: Do you think that there is any logic to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In an article that appeared in Business Review Weekly on 4 March 2004 (entitled ‘Share options trap’), it is stated that under AASB 2 ‘companies must value and record as an expense any options granted to employees in exchange for their services. Previously, Australian companies recorded share-based payments in the notes to financial statements, arguing that share-based payments did not cost the company anything’.

REQUIRED Do you think that there is any logic to the argument that ‘share-based payments did not cost the company anything’?

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Share based payments are those transactions by which an organisation receives goods and services by issuing shares of the corporation at an agreed price on grant date.

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