PROBLEM 33-12 On January 1, 2018, Josh Company granted share options to 10 of its key employees entitling them to acquire P100 par value shares of the company at P110 per share. The share options will vest on December 31, 2020, provided that the employees remain in the company's employ and provided that revenues reach P100 million, the employees will receive 1,000 options each. If revenues reach P150 million, the employees will receive 2,000 options each. If revenues reach P200 million the employees will receive 3,000 options each. The market value of the option on the date of grant is P30. The company has a steady pattern of 25% increase in revenues every year over the last 5 years and expects the same pattern during the vesting period. In addition, the following information were deemed relevant for the computation of the Salaries expense for each year: Estimated number of Employees who will leave the Actual revenue earned Date company Dec. 31, 2018 2 P80 million Dec. 31, 2019 120 million Dec. 31, 2020 3* 200 million *Actual number of employees who left the company. Questions: How much is the salaries expense to be recognized in 2018? P80,000 P100 000 c. P180,000 300 000 2.

PROBLEM 33-12 On January 1, 2018, Josh Company granted share options to 10 of its key employees entitling them to acquire P100 par value shares of the company at P110 per share. The share options will vest on December 31, 2020, provided that the employees remain in the company's employ and provided that revenues reach P100 million, the employees will receive 1,000 options each. If revenues reach P150 million, the employees will receive 2,000 options each. If revenues reach P200 million the employees will receive 3,000 options each. The market value of the option on the date of grant is P30. The company has a steady pattern of 25% increase in revenues every year over the last 5 years and expects the same pattern during the vesting period. In addition, the following information were deemed relevant for the computation of the Salaries expense for each year: Estimated number of Employees who will leave the Actual revenue earned Date company Dec. 31, 2018 2 P80 million Dec. 31, 2019 120 million Dec. 31, 2020 3* 200 million *Actual number of employees who left the company. Questions: How much is the salaries expense to be recognized in 2018? P80,000 P100 000 c. P180,000 300 000 2.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 6P

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Question

PROBLEM 33-12
On January 1, 2018, Josh Company granted share options to 10 of its key employees
entitling them to acquire P100 par value shares of the company at P110 per share. The
share options will vest on December 31, 2020, provided that the employees remain in the
company's employ and provided that revenues reach P100 million, the employees will
receive 1,000 options each. If revenues reach P150 million, the employees will receive
2,000 options each. If revenues reach P200 million the employees will receive 3,000
options each.
The market value of the option on the date of grant is P30. The company has a steady
pattern of 25% increase in revenues every year over the last 5 years and expects the same
pattern during the vesting period.
In addition, the following information were deemed relevant for the computation of the
Salaries expense for each year:
Date
Estimated number of
Employees who will leave the
Actual revenue earned
company
Dec. 31, 2018
2
P80 million
Dec. 31, 2019
2
120 million
Dec. 31, 2020
3*
200 million
*Actual number of employees who left the company.
Questions:
How much is the salaries expense to be recognized in 2018?
P80,000
c. P180,000
d. P300.000
P100.000

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