Tucan is a first-time IFRS adopter, its date of transition is 1 January 2018 and its first IFRS reporting period end 31 December 2019. On 1 January 2018, Tucan granted 25,000 share options to each of its four executives, which they may exercise only if (a) they remained employed for three years following the date of grant and (b) its earnings per share in 2020 is 50% higher than it was in 2017.
Since Tucan granted 25,000 share options to each of its four executives on 1 January 2018, is it required to fully apply IFRS 2?
A. IFRS 2 may be optionally applied to only those transactions that vested in 2019.
B. No, IFRS 2 must only be applied to transactions occurring after 31 December 2019.
C. Yes, IFRS 2 must be fully applied
C. Yes, IFRS 2 must be fully applied.
As a first-time IFRS adopter, Tucan is required to apply IFRS 2, Share-based Payment, in its entirety from the date of transition to IFRS, which in this case is 1 January 2018. The share options granted to its executives on that date are share-based payment transactions that fall within the scope of IFRS 2. According to IFRS 2, all share-based payment transactions, regardless of when they vested, should be accounted for and disclosed in accordance with the standard from the date of transition to IFRS. Therefore, Tucan is required to apply IFRS 2 to these share option grants in full, even though the vesting of these options occurred after the transition date.
