Question: It is stated under AASB 2 'Share based payment' that companies must value and record as an expense any options granted to employees in exchange

It is stated under AASB 2 'Share based payment' that 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 the financial statements, arguing that share-based payments did not cost the company anything.

Required a) Explain the reasoning that led to the development of AASB 2 'Share based payment'. b) Discuss briefly the possible economic implications of AASB 2.

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