Ditsapelo Unlimited on 1 January 2024 granted 300 share appreciation rights (SARS) to each of its 200 employees on the condition that they continue to work for the entity for two years. At 1 January 2024, the entity expects that 50 of those employees will leave each year. During 2024, 20 employees leave Ditsapelo Unlimited. The entity expects that the same number will leave in the second year. 25 Employees are expected to leave during 2025. The SARS vest on 31 December 2025 and can be exercised during 2026 and 2027. On 31 December 2026, 105 of the eligible employees exercised their SARS in full. The remaining eligible employees exercised their SARS in full on 31 December 2027. The fair value and intrinsic value of each SAR was as follows: Reporting date FV per SAR Intrinsic value per SAR 31 December 2024 P10 31 December 2025 P15 31 December 2026 P16 P16 31 December 2027 P17 P17 Required: a) Calculate the amount to be recognised as a remuneration expense in the statement of profit or loss, together with the liability to be recognised in the statement of financial position, for each of the two years to the vesting date. b) Calculate the amount to be recognised as a remuneration expense and reported as a liability in the financial statements for each of the two years ended 31 December 2026 and 2027.
Ditsapelo Unlimited on 1 January 2024 granted 300 share appreciation rights (SARS) to each of its 200 employees on the condition that they continue to work for the entity for two years. At 1 January 2024, the entity expects that 50 of those employees will leave each year. During 2024, 20 employees leave Ditsapelo Unlimited. The entity expects that the same number will leave in the second year. 25 Employees are expected to leave during 2025. The SARS vest on 31 December 2025 and can be exercised during 2026 and 2027. On 31 December 2026, 105 of the eligible employees exercised their SARS in full. The remaining eligible employees exercised their SARS in full on 31 December 2027. The fair value and intrinsic value of each SAR was as follows: Reporting date FV per SAR Intrinsic value per SAR 31 December 2024 P10 31 December 2025 P15 31 December 2026 P16 P16 31 December 2027 P17 P17 Required: a) Calculate the amount to be recognised as a remuneration expense in the statement of profit or loss, together with the liability to be recognised in the statement of financial position, for each of the two years to the vesting date. b) Calculate the amount to be recognised as a remuneration expense and reported as a liability in the financial statements for each of the two years ended 31 December 2026 and 2027.
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Transcribed Image Text:Ditsapelo Unlimited on 1 January 2024 granted 300 share appreciation rights (SARS) to each of its 200
employees on the condition that they continue to work for the entity for two years. At 1 January 2024,
the entity expects that 50 of those employees will leave each year.
During 2024, 20 employees leave Ditsapelo Unlimited. The entity expects that the same number will
leave in the second year.
25 Employees are expected to leave during 2025.
The SARS vest on 31 December 2025 and can be exercised during 2026 and 2027. On 31 December 2026,
105 of the eligible employees exercised their SARS in full. The remaining eligible employees exercised
their SARS in full on 31 December 2027.
The fair value and intrinsic value of each SAR was as follows:
Reporting date
FV per SAR
Intrinsic value per SAR
31 December 2024
P10
31 December 2025
P15
31 December 2026
P16
P16
31 December 2027
P17
P17
Required:
a) Calculate the amount to be recognised as a remuneration expense in the statement of profit or loss,
together with the liability to be recognised in the statement of financial position, for each of the two
years to the vesting date.
b) Calculate the amount to be recognised as a remuneration expense and reported as a liability in the
financial statements for each of the two years ended 31 December 2026 and 2027.
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