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Poncho, a public limited company, has entered into several share related transactions during the period and wishes to obtain advice on how to account for them.

(i)            On 1 May 2017, Poncho granted 500 share appreciation rights (SARs) to its 300 managers. All of the rights vested on 30 April 2019 but they can be exercised from 1 May 2019 up to 30 April 2021. At the grant date, the value of each SAE was £10 and it was estimated that 5% of the managers would leave during the vesting period. The   fair value of each SAR is as follows:



Date                                                        Fair value ($)        

30 April 2018                                                  9

30 April 2019                                                11

30 April 2020                                                12



All of the managers who were expected to leave employment did leave the company as expected before 30 April 2019. On 30 April 2020, 60 managers exercised their options when the intrinsic value of the right was $10.50 and were paid in cash.



Poncho is confused as to whether to account for the SARs under IFRS 2 Share-based Payment or IFRS 13 Fair Value Measurement, and would like advice as to how the SARs should have been accounted for between the grant date and 30 April 2020.                                                                              

                                                                                                     

(ii)           Poncho issued shares during the financial year. Some of those shares were subscribed for by employees who were existing shareholders, and some were issued to an entity, Grief, which owned 5% of Poncho's share capital. Before the shares were issued, Poncho offered to buy a building from Grief and agreed that the purchase price would be settled by the issue of shares. Poncho requires advice as to whether these transactions should be accounted for under IFRS 2 Share-based Payment.                                                            



(iii)        Poncho has entered into a contract with a producer to purchase 350 tonnes of wheat. The purchase price will be settled in cash at an amount equal to the value of 2,500 of Poncho's shares, less the market value of 350 tonnes of wheat. Poncho has no intention of taking physical delivery of the wheat. Poncho would like advice as to whether or not to account for this transaction as a share-based payment transaction under IFRS 2 Share-based Payment.                                                            



REQUIRED:


Advise the directors of Poncho on their various requests above.

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