Nexians Corporation awarded fixed options to 100 employees on 1 January 20x4 to acquire 20,000 shares of the company. The fair value of the option was determined to be $1.20 using the Black-Scholes models and the exercise price was $3.50 per share (same as the market price at 1 January 20x4). Other terms of the options are shown as follows: a. The share option expired five years after the date of the grant. b. The employees must remain employed until 31 December 20x6. c. The management estimated a forfeiture rate of 2%. This estimate was revised at the end of each year. d. In 20x4, three employees left the firm and the forfeiture rate was revised to 5% at 31 December 20x4. e. In 20x5, another two employees left the firm and the forfeiture rate was maintained at 5% at 31 December 20x5. f. In 20x6, three employees left the firm. Required: 1. Calculate the remuneration expense relating to the share options for the following years 20x4, 20x5 and 20x6. 2. Prepare the journal entries to record the share-based transactions for the period 20x4 to 20x6.

Nexians Corporation awarded fixed options to 100 employees on 1 January 20x4 to acquire 20,000 shares of the company. The fair value of the option was determined to be $1.20 using the Black-Scholes models and the exercise price was $3.50 per share (same as the market price at 1 January 20x4). Other terms of the options are shown as follows: a. The share option expired five years after the date of the grant. b. The employees must remain employed until 31 December 20x6. c. The management estimated a forfeiture rate of 2%. This estimate was revised at the end of each year. d. In 20x4, three employees left the firm and the forfeiture rate was revised to 5% at 31 December 20x4. e. In 20x5, another two employees left the firm and the forfeiture rate was maintained at 5% at 31 December 20x5. f. In 20x6, three employees left the firm. Required: 1. Calculate the remuneration expense relating to the share options for the following years 20x4, 20x5 and 20x6. 2. Prepare the journal entries to record the share-based transactions for the period 20x4 to 20x6.

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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