On January 1, Year 1, Lasagna Corporation granted to an employee the right to choose either shares or cash payment. The choices are as follows: • Share alternative - equal to 25,000 shares with par value of P30 • Cash alternative - cash payment equal to the market value of 20,000 shares The grant is conditional upon the completion of three years of service. On grant date, on January 1, Year 1, the share price is P51. The share prices for the three-year vesting period are P54 on December 31, Year 1, P66 on December 31, Year 2 and P65 on December 31, Year 3. After taking into account the effect of vesting restrictions, the entity has estimated that the fair value of the share alternative is P48.
On January 1, Year 1, Lasagna Corporation granted to an employee the right to choose either shares or cash payment. The choices are as follows: • Share alternative - equal to 25,000 shares with par value of P30 • Cash alternative - cash payment equal to the market value of 20,000 shares The grant is conditional upon the completion of three years of service. On grant date, on January 1, Year 1, the share price is P51. The share prices for the three-year vesting period are P54 on December 31, Year 1, P66 on December 31, Year 2 and P65 on December 31, Year 3. After taking into account the effect of vesting restrictions, the entity has estimated that the fair value of the share alternative is P48.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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23
Transcribed Image Text:On January 1, Year 1, Lasagna Corporation granted to an employee the right to choose either
shares or cash payment. The choices are as follows:
• Share alternative - equal to 25,000 shares with par value of P30
• Cash alternative - cash payment equal to the market value of 20,000 shares
The grant is conditional upon the completion of three years of service. On grant date, on January
1, Year 1, the share price is P51. The share prices for the three-year vesting period are P54 on
December 31, Year 1, P66 on December 31, Year 2 and P65 on December 31, Year 3. After taking
into account the effect of vesting restrictions, the entity has estimated that the fair value of the
share alternative is P48.
Transcribed Image Text:What is the share premium if the employee has chosen the share alternative
on December 31, Year 3? *
880,000
730,000
550,000
750,000
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