What characterizes a cash-settled share-based payment?

In a cash-settled share-based payment, the key characteristic is that the entity incurs a liability to transfer cash based on the equity price. This means that instead of issuing shares to employees or other parties as compensation, the company agrees to pay a specific amount of cash that is linked to the value of its shares. This creates a liability on the company's balance sheet, as the payment is contingent on the performance of the company’s equity.

The measurement of this liability typically involves estimating the fair value of the equity instruments at each reporting date, which impacts the financial statements as adjustments to the liability are made over time based on changes in the share price.

The other options describe different aspects of share-based payments but do not accurately represent the nature of cash-settled transactions. For instance, providing goods in exchange for cash refers more to a straightforward sale rather than a payment related to share values. Similarly, the payment mechanism does not depend on seller agreement and is not limited to trading shares for goods or services but specifically relates to cash payments tied to equity prices.