Item1ItemDetailsWhen the financial controller was providing details on the employee share schemes at Knappa, it wasidentified that share options granted to the production staff on 1 July 2022 were not accounted for in theyear ended 30 June 2023 financial statements.On 1 July 2022, 1,000 share options were granted to each of Knappa's 30 production employees, on thecondition that the employees remain with the company for the next two years and that the share priceincreases from $26.50 per share on 1 July 2022 to $35 per share on 30 June 2024. If the share pricetarget at 30 June 2024 is achieved, the share options can be exercised at any time over the subsequent12 months (ie up to 30 June 2025).The fair value of each share option at the grant date was $5.60.You have obtained the following information:YearNumber of employees whodeparted during the yearNo of employees expectedto depart in future years30.06.2023¹30.06.20241. This information was obtained at 30 June 2023; however, the appropriate accounting was not recognised.The impact of the employee share scheme is considered material to the financial statements.2N/AKnappa shareprice per share($)28.35••32.15On 30 June 2024, Knappa entered into a five-year lease arrangement for a shop.The lessor gave permission for Knappa to install a wood-fired pizza oven on-site on the condition that it isremoved and the shop is restored at the end of the lease arrangement on 30 June 2029.To encourage Knappa to agree to the lease arrangement, the lessor offered a one-off cash payment of$20,000, which was paid on 30 June 2024.DetailsAdditional informationFive annual lease payments of $240,000, payable on 30 June each year. The first payment will bedue on 30 June 2025.The wood-fired pizza oven was installed on 30 June 2024.The estimated costs to remove the wood-fired pizza oven and restore the shop is $25,000 on 30June 2029. The discounted amount of these estimated costs is correctly calculated at $19,588 at 30June 2024.The interest rate implicit in the lease is 8%.

1. Employee Share Scheme:Given that the share options were not accounted for in the financial…

2 Item On 30 June 2024, Knappa entered into a five-year lease arrangement for a shop. The lessor gave permission for Knappa to install a wood-fired pizza oven on-site on the condition that it is removed and the shop is restored at the end of the lease arrangement on 30 June 2029. To encourage Knappa to agree to the lease arrangement, the lessor offered a one-off cash payment of $20,000, which was paid on 30 June 2024. Details Additional information • Five annual lease payments of $240,000, payable on 30 June each year. The first payment will be due on 30 June 2025. • • . The wood-fired pizza oven was installed on 30 June 2024. The estimated costs to remove the wood-fired pizza oven and restore the shop is $25,000 on 30 June 2029. The discounted amount of these estimated costs is correctly calculated at $19,588 at 30 June 2024. The interest rate implicit in the lease is 8%.

2 Item On 30 June 2024, Knappa entered into a five-year lease arrangement for a shop. The lessor gave permission for Knappa to install a wood-fired pizza oven on-site on the condition that it is removed and the shop is restored at the end of the lease arrangement on 30 June 2029. To encourage Knappa to agree to the lease arrangement, the lessor offered a one-off cash payment of $20,000, which was paid on 30 June 2024. Details Additional information • Five annual lease payments of $240,000, payable on 30 June each year. The first payment will be due on 30 June 2025. • • . The wood-fired pizza oven was installed on 30 June 2024. The estimated costs to remove the wood-fired pizza oven and restore the shop is $25,000 on 30 June 2029. The discounted amount of these estimated costs is correctly calculated at $19,588 at 30 June 2024. The interest rate implicit in the lease is 8%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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