On 1 October 2021, Shildon plc granted 500 £1 share appreciation rights (SARS) to each of its 2,000employees. Employees will be eligible to exercise their rights on 30 September 2024, if they remainemployed by Shildon plc. On 30 September 2022, Shildon plc estimated that 10% of employees wouldleave within the vesting period and forfeit their rights to the SARS. On 30 September 2023, the estimate oftotal leavers was revised to 25 %. On 1 October 2021, the fair value of each £1 SAR was £5. This fair valueof each £1 SAR was £6 on 30 September 2022 and £8 on 30 September 2023. The SAR liability wascorrectly calculated in accordance with IFRS 2 Share - based payments on 30 September 2022. Required:Advise the directors of Shildon plc on the accounting treatment of the SARS in the year ended 30 September2023.

Share Appreciation Rights (SARs) is a form of incentive compensation granted to employees. SARs are…

Answered: Advise the directors of Shildon plc on…

Business

Accounting

Advise the directors of Shildon plc on the accounting treatment of the SARS in the year ended 30 September 2023.

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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