ASBE No. 11
Active
Share-based Payment
Share-based Payment is part of the Chinese Accounting Standards for Business Enterprises (ASBE).
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Conceptual Framework Linkage
A genuinely thoroughly converged standard
ASBE No. 11 governs TRANSACTIONS in WHICH an ENTERPRISE grants EQUITY instruments, or INCURS a LIABILITY based on EQUITY instrument VALUES, as CONSIDERATION for EMPLOYEE services or OTHER goods/SERVICES received. This STANDARD is ONE of the MOST thoroughly CONVERGED within the ENTIRE ASBE suite, CLOSELY mirroring IFRS 2's OWN equity-settled/cash-SETTLED dichotomy internationally.
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Scope
Equity-settled and cash-settled arrangements
This Standard applies to SHARE-based PAYMENT transactions with EMPLOYEES (STOCK options, RESTRICTED shares) and, LESS commonly, with OTHER parties PROVIDING goods or SERVICES in EXCHANGE for EQUITY instruments or CASH amounts BASED on the enterprise's SHARE price.
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Equity-Settled Share-based Payment
Fair value at grant date, expensed over the vesting period
EQUITY-SETTLED share-BASED payment TRANSACTIONS are MEASURED at the FAIR VALUE of the EQUITY instruments GRANTED, DETERMINED at the GRANT date – RECOGNISED as an EXPENSE (WITH a CORRESPONDING increase in CAPITAL RESERVE, WITHIN owners' EQUITY) over the VESTING period, WITHOUT subsequent REMEASUREMENT for changes in FAIR value AFTER the grant DATE.
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Cash-Settled Share-based Payment
A liability, remeasured at each reporting date
CASH-SETTLED share-BASED payment TRANSACTIONS (e.g. SHARE APPRECIATION rights) are MEASURED at the FAIR VALUE of the LIABILITY incurred – RECOGNISED as an EXPENSE and a CORRESPONDING LIABILITY, WITH the LIABILITY REMEASURED at FAIR value at EACH reporting DATE UNTIL settlement, WITH changes in FAIR value RECOGNISED in PROFIT or LOSS.
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Vesting Conditions – Service and Performance
Adjusting the expense for the probability of vesting
SERVICE CONDITIONS (a REQUIRED period of CONTINUED employment) and PERFORMANCE CONDITIONS (a SPECIFIED performance TARGET) are BOTH reflected by ADJUSTING the NUMBER of equity INSTRUMENTS expected to VEST, RATHER than adjusting the FAIR VALUE per INSTRUMENT itself – CONSISTENT with IFRS 2's OWN treatment internationally.
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Modifications and Cancellations
A minimum expense floor, with incremental value for beneficial modifications
WHERE an AWARD is MODIFIED in a WAY that INCREASES its FAIR value, the INCREMENTAL fair VALUE is RECOGNISED as an ADDITIONAL expense OVER the REMAINING vesting PERIOD. AT MINIMUM, the ORIGINAL grant-date fair VALUE continues to be RECOGNISED as IF the MODIFICATION had NOT occurred – CONSISTENT with IFRS 2's OWN modification framework.
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Worked Example – Expensing an Equity-Settled Grant
Spreading grant-date fair value over the vesting period
Example: A 3-year vesting stock option grant
A company grants stock options to employees with a total grant-date fair value of RMB 18,000,000, vesting evenly over 3 years of continued service.
The company recognises an EXPENSE of RMB 18,000,000 ÷ 3 = RMB 6,000,000 per year, with a CORRESPONDING increase in CAPITAL RESERVE within owners' EQUITY, WITHOUT any subsequent REMEASUREMENT for share PRICE movements after the GRANT date.
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Worked Example – Remeasuring a Cash-Settled Award
A liability that moves with the share price
Example: Share appreciation rights
A company grants share appreciation rights with a fair value of RMB 4,000,000 at the prior reporting date. By the current reporting date, the fair value of the liability has increased to RMB 5,200,000.
The company RECOGNISES an ADDITIONAL expense of RMB 5,200,000 − RMB 4,000,000 = RMB 1,200,000, INCREASING the LIABILITY to RMB 5,200,000 – REFLECTING the ONGOING remeasurement REQUIRED for cash-SETTLED awards, UNLIKE the equity-SETTLED treatment.
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Disclosure Requirements
What ASBE No. 11 requires
Nature and terms of share-based payment arrangementsMethods used to estimate fair value, and the key assumptions appliedTotal expense recognised for equity-settled and cash-settled arrangements separately
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Critical Judgments & Estimates
Where judgement matters most
SIGNIFICANT JUDGEMENTS
Classifying an arrangement as equity-settled or cash-settled
SIGNIFICANT ESTIMATES
Option-pricing model inputs (volatility, expected life, risk-free rate) underlying grant-date fair valueExpected achievement of performance conditions, and expected forfeiture rates
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Relationship to IFRS 2
Comparison – ASBE 11 vs IFRS 2
FeatureASBE 11IFRS 2
Equity-settled measurementGrant-date fair value, no remeasurementGrant-date fair value, no remeasurement – converged
Cash-settled measurementRemeasured to fair value each periodRemeasured to fair value each period – converged
A GENUINELY closely converged STANDARD – THIS is one of the FEW ASBE topics WHERE the international COMPARISON section HAS very little SUBSTANTIVE divergence to REPORT.
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Statement Mapping
Where every share-based payment event lands
EventStatement(s) affectedNotes
Equity-settled expenseSCOE ISCredited to capital reserve within equity
Cash-settled expenseBS ISRecognised as a liability, remeasured each period
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Related Standards
Cross-reference map
StandardConnection
ASBE No. 9Employee Benefits – the general employee compensation framework this Standard supplements for equity-based arrangements
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Quick-Reference Glossary
Equity-settled share-based payment
A transaction settled by issuing equity instruments, measured at grant-date fair value with no subsequent remeasurement.
Cash-settled share-based payment
A transaction settled in cash based on the enterprise's share price, recognised as a liability remeasured to fair value each period.
Financial statement key (Chinese GAAP / ASBE terminology)
BS Balance Sheet (资产负债表)
IS Income Statement (利润表)
SCOE Statement of Changes in Owners' Equity (所有者权益变动表)
CFS Cash Flow Statement (现金流量表)
History & Development
2006-02
ASBE No. 11 Share-based Payment issued
Operative for periods beginning on or after 1 February 2007