"IFRIC 11: IFRS 2 – Group and Treasury Share Transactions"

IFRIC 11, titled "IFRS 2 – Group and Treasury Share Transactions," addresses specific issues related to share-based payment transactions within a group, particularly in the context of the International Financial Reporting Standard (IFRS) 2 "Share-based Payment." This interpretation provides guidance on how to apply IFRS 2 to situations where an entity receives goods or services as consideration for its own equity instruments or those of another entity within the same group (including share-based payment transactions involving a parent's equity instruments).

The core focus of IFRIC 11 is on two types of transactions:

1. Equity-settled share-based payment transactions in a group: This aspect of IFRIC 11 clarifies how to treat transactions in which an entity receives goods or services from its employees or other parties and settles the transaction with its own equity instruments or with equity instruments of another entity within the same group. The key point here is that such transactions should be treated as equity-settled, regardless of how the entity obtains the equity instruments.

2. Treasury share transactions: These involve transactions in which a group entity receives goods or services as consideration for equity instruments of another entity within the same group, and these equity instruments are already held by the entity (treasury shares). IFRIC 11 clarifies that these transactions should be accounted for as equity-settled, not as cash-settled.

The interpretation has significant implications for the accounting of share-based payments. For one, it ensures that transactions involving equity instruments of the parent company or another group entity are consistently accounted for under IFRS 2. This consistency is crucial for the comparability and transparency of financial statements, especially in complex group structures.

Additionally, by specifying the accounting treatment for treasury share transactions, IFRIC 11 provides clarity in situations that might otherwise be ambiguous. It guides entities in determining whether such transactions should be considered equity-settled or cash-settled, thereby influencing the recognition, measurement, and disclosure of these transactions in financial statements.

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