Problem 24. On January 1, 2015, ID Inc. granted to an employee the right to choose either: a. 12,000 share (Share or Equity Alternative) (Share options) b. Cash payment equal to market value of 10,000 shares (Cash Alternative) (Share appreciation rights) The grant is conditional upon the completion of three years of service. If the employee chooses the share alternative, the shares must be held for three years after vesting date. The par value of the shares is P25 and at grant date on January 1, 2015, the share price is P51. The share prices for the three-year vesting period are P54 on December 31, 2015, P60 on December 31, 2016 and P65 on December 31, 2017. After taking into account the effects of post-vesting restrictions, the entity has estimated that the fair value of the share or equity alternatives is P48 per share. Required: Based on the result of your audit determine the following:

Problem 24. On January 1, 2015, ID Inc. granted to an employee the right to choose either: a. 12,000 share (Share or Equity Alternative) (Share options) b. Cash payment equal to market value of 10,000 shares (Cash Alternative) (Share appreciation rights) The grant is conditional upon the completion of three years of service. If the employee chooses the share alternative, the shares must be held for three years after vesting date. The par value of the shares is P25 and at grant date on January 1, 2015, the share price is P51. The share prices for the three-year vesting period are P54 on December 31, 2015, P60 on December 31, 2016 and P65 on December 31, 2017. After taking into account the effects of post-vesting restrictions, the entity has estimated that the fair value of the share or equity alternatives is P48 per share. Required: Based on the result of your audit determine the following:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

Problem 24. On January 1, 2015, ID Inc. granted to an employee the right to choose either:
a. 12,000 share (Share or Equity Alternative) (Share options)
b. Cash payment equal to market value of 10,000 shares (Cash Alternative) (Share appreciation
rights)
The grant is conditional upon the completion of three years of service. If the employee chooses the
share alternative, the shares must be held for three years after vesting date.
The par value of the shares is P25 and at grant date on January 1, 2015, the share price is P51.
The share prices for the three-year vesting period are P54 on December 31, 2015, P60 on December
31, 2016 and P65 on December 31, 2017.
After taking into account the effects of post-vesting restrictions, the entity has estimated that the fair
value of the share or equity alternatives is P48 per share.
Required: Based on the result of your audit, determine the following:
1. Compensation expense for year 2015
2. Compensation expense for year 2016
3. Compensation expense for year 2017
4. Credit to share premium from issuance of shares if the employee chooses share
alternative
5. Credit to share premium if the employee chooses cash alternative

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