Share appreciation rights (SARs) On 1 October 2021, Shildon plc granted 500 £1 share appreciation rights (SARs) to each of its 2,000 employees. Employees will be eligible to exercise their rights on 30 September 2024, if they remain employed by Shildon plc. On 30 September 2022, Shildon plc estimated that 10% of employees would leave within the vesting period and forfeit their rights to the SARs. On 30 September 2023, the estimate of total leavers was revised to 25%. On 1 October 2021, the fair value of each £1 SAR was £5. This fair value of each £1 SAR was £6 on 30 September 2022 and £8 on 30 September 2023. The SAR liability was correctly calculated in accordance with IFRS 2 Share-based payments on 30 September 2022. Advise the directors of Shildon plc on the accounting treatment of the SARs in the year ended 30 September 2023.
Share appreciation rights (SARs) On 1 October 2021, Shildon plc granted 500 £1 share appreciation rights (SARs) to each of its 2,000 employees. Employees will be eligible to exercise their rights on 30 September 2024, if they remain employed by Shildon plc. On 30 September 2022, Shildon plc estimated that 10% of employees would leave within the vesting period and forfeit their rights to the SARs. On 30 September 2023, the estimate of total leavers was revised to 25%. On 1 October 2021, the fair value of each £1 SAR was £5. This fair value of each £1 SAR was £6 on 30 September 2022 and £8 on 30 September 2023. The SAR liability was correctly calculated in accordance with IFRS 2 Share-based payments on 30 September 2022. Advise the directors of Shildon plc on the accounting treatment of the SARs in the year ended 30 September 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Share appreciation rights (SARs)
On 1 October 2021, Shildon plc granted 500 £1 share appreciation rights (SARs) to each of its 2,000
employees. Employees will be eligible to exercise their rights on 30 September 2024, if they remain
employed by Shildon plc.
On 30 September 2022, Shildon plc estimated that 10% of employees would leave within the vesting
period and forfeit their rights to the SARs. On 30 September 2023, the estimate of total leavers was
revised to 25%.
On 1 October 2021, the fair value of each £1 SAR was £5. This fair value of each £1 SAR was £6 on
30 September 2022 and £8 on 30 September 2023.
The SAR liability was correctly calculated in accordance with IFRS 2 Share-based payments on 30
September 2022.
Advise the directors of Shildon plc on the accounting treatment of the SARs in the year ended 30
September 2023.
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