Sharing in success

A limited liability partnership (LLP) acts as a mergers and acquisitions consultant. One of its overseas clients will shortly be paying it a success fee which will be in the form of share options in their overseas parent company.

From an accounting point of view the LLP prepares accounts under FRSSE (the financial reporting standard for smaller entities) and therefore is not obliged to disclose the share options at fair value only at cost which is £nil.

Thus the accounts may only mention by way of note that options have been received for which the cost was £nil. As a result no income is shown in the LLP accounts in respect of the success fee.

When the share options are exercised a year from being granted there is no further payment to be made. At this stage again the cost of...