roblem 3-12 On January 1, 2019, an entity granted to a senior executive 20,000 share options, conditional upon the executive’s remaining in the entity’s employ until December 31, 2021. The par value per share is P50. The exercise price is P100. However, the exercise drops to P80 if the entity’s earnings increase by at least an average of 10% per year over the three-year period. On grant date, the entity estimates that the fair value of the share option is P30 if the exercise price is P80. If the exercise price is P100, the fair value of the share option is P25. During 2019 and 2020, the earnings increased by 12% and 11% respectively. However, during 2021, the earnings increased only by 4%. Required: A. Prepare journal entries from 2019 to 2021
roblem 3-12 On January 1, 2019, an entity granted to a senior executive 20,000 share options, conditional upon the executive’s remaining in the entity’s employ until December 31, 2021. The par value per share is P50. The exercise price is P100. However, the exercise drops to P80 if the entity’s earnings increase by at least an average of 10% per year over the three-year period. On grant date, the entity estimates that the fair value of the share option is P30 if the exercise price is P80. If the exercise price is P100, the fair value of the share option is P25. During 2019 and 2020, the earnings increased by 12% and 11% respectively. However, during 2021, the earnings increased only by 4%. Required: A. Prepare journal entries from 2019 to 2021
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 3-12
On January 1, 2019, an entity granted to a senior executive 20,000 share options, conditional
upon the executive’s remaining in the entity’s employ until December 31, 2021. The par
value per share is P50. The exercise price is P100. However, the exercise drops to P80 if the
entity’s earnings increase by at least an average of 10% per year over the three-year period.
On grant date, the entity estimates that the fair value of the share option is P30 if the exercise
price is P80. If the exercise price is P100, the fair value of the share option is P25.
During 2019 and 2020, the earnings increased by 12% and 11% respectively. However,
during 2021, the earnings increased only by 4%.
Required:
A. Prepare journal entries from 2019 to 2021
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