Compute the amounts of expense and the related liability and equity components in each
Compute the amounts of expense and the related liability and equity components in each
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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QUESTION 6
On 1.1.2017, MEERA Bhd grants to an employee the right to choose either 12,000 shares or
cash payment equal to the value of 10,000 shares (phantom shares). The grant conditional
upon the employee remaining in the company's employ for three years. If the employee
chooses the share alternative, the shares must be held for three years after vesting date.
At grant date, the company's share price is RM5.00. At the end of year 2017, 2018 and 2019,
the share price is RM5.20, RM5.60 and RM6.20, respectively. After taking into account the
post-vesting transfer restrictions, the grant date fair value of the share alternative is RM4.90.
MEERA shares have a nominal value of RM1 each.
Required:
a) Compute the amounts of expense and the related liability and equity components in each
year.
b) Show the effect if, at the end of year 2019, the employee chooses:
(1)
the cash settlement, and
(ii)
the equity settlement
312
O
of 3
[+]
↓
60
P
4) D
| ✓
...
16:07
10
22/05/2022](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F038f1cb7-b6bd-4e43-bac9-5d7d216ef233%2Fe1589b34-8995-495f-b86f-1ee023062838%2Fv0jxen_processed.png&w=3840&q=75)
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28°C
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TUTORIAL QUESTION 4.pdf X
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C
Ⓒ File | C:/Users/acer/Documents/UNIVERSITI%20MALAYSIA%20SABAH/SEMESTER%204%20COURSE/BP22603%20FAR%2011/CHAP... Q
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QUESTION 6
On 1.1.2017, MEERA Bhd grants to an employee the right to choose either 12,000 shares or
cash payment equal to the value of 10,000 shares (phantom shares). The grant conditional
upon the employee remaining in the company's employ for three years. If the employee
chooses the share alternative, the shares must be held for three years after vesting date.
At grant date, the company's share price is RM5.00. At the end of year 2017, 2018 and 2019,
the share price is RM5.20, RM5.60 and RM6.20, respectively. After taking into account the
post-vesting transfer restrictions, the grant date fair value of the share alternative is RM4.90.
MEERA shares have a nominal value of RM1 each.
Required:
a) Compute the amounts of expense and the related liability and equity components in each
year.
b) Show the effect if, at the end of year 2019, the employee chooses:
(1)
the cash settlement, and
(ii)
the equity settlement
312
O
of 3
[+]
↓
60
P
4) D
| ✓
...
16:07
10
22/05/2022
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