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The Cake Company granted 100 share options to each of its 500 employees on January 1, 2018. The option plan allows the employee to purchase a share of the entity's P100 par value ordinary share at P120 per share. On January 1, 2018, the fair value of each option is P30. The option plan requires the employees receiving the options to be in the employ of the company for the next three years. Options are exercisable starting January 1, 2021 and the options expire at the end of 2022. At January 1, 2018, it was estimated that 20% of the employees will leave during the next three years. Actual and revised estimate of employees leaving the company during 2018, 2019 and 2020 are as follows: 2018: 20 employees left; revised estimate is 15% of remaining employees 2019: 10 employees left; revised estimate is 10% of remaining employees 2020: 18 employees left During 2021 through 2022, 400 employees exercised their options while the remaining employees allowed the options to lapse. How much is the share premium recognized upon exercise of the options? * O O 1,200,000 O 2,000,000 O 3,600,000 O 800,000

The Cake Company granted 100 share options to each of its 500 employees on January 1, 2018. The option plan allows the employee to purchase a share of the entity's P100 par value ordinary share at P120 per share. On January 1, 2018, the fair value of each option is P30. The option plan requires the employees receiving the options to be in the employ of the company for the next three years. Options are exercisable starting January 1, 2021 and the options expire at the end of 2022. At January 1, 2018, it was estimated that 20% of the employees will leave during the next three years. Actual and revised estimate of employees leaving the company during 2018, 2019 and 2020 are as follows: 2018: 20 employees left; revised estimate is 15% of remaining employees 2019: 10 employees left; revised estimate is 10% of remaining employees 2020: 18 employees left During 2021 through 2022, 400 employees exercised their options while the remaining employees allowed the options to lapse. How much is the share premium recognized upon exercise of the options? * O O 1,200,000 O 2,000,000 O 3,600,000 O 800,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Cake Company granted 100 share options to each of its 500 employees on January 1, 2018. The option plan allows the employee to purchase a share of the entity's P100 par value ordinary share at P120 per share. On January 1, 2018, the fair value of each option is P30. The option plan requires the employees receiving the options to be in the employ of the company for the next three years. Options are exercisable starting January 1, 2021 and the options expire at the end of 2022. At January 1, 2018, it was estimated that 20% of the employees will leave during the next three years. Actual and revised estimate of employees leaving the company during 2018, 2019 and 2020 are as follows: 2018: 20 employees left; revised estimate is 15% of remaining employees 2019: 10 employees left; revised estimate is 10% of remaining employees 2020: 18 employees left During 2021 through 2022, 400 employees exercised their options while the remaining employees allowed the options to lapse. How much is the share premium recognized upon exercise of the options? * E O 1,200,000 O 2,000,000 O 3,600,000 O 800,000
Transcribed Image Text:The Cake Company granted 100 share options to each of its 500 employees on January 1, 2018. The option plan allows the employee to purchase a share of the entity's P100 par value ordinary share at P120 per share. On January 1, 2018, the fair value of each option is P30. The option plan requires the employees receiving the options to be in the employ of the company for the next three years. Options are exercisable starting January 1, 2021 and the options expire at the end of 2022. At January 1, 2018, it was estimated that 20% of the employees will leave during the next three years. Actual and revised estimate of employees leaving the company during 2018, 2019 and 2020 are as follows: 2018: 20 employees left; revised estimate is 15% of remaining employees 2019: 10 employees left; revised estimate is 10% of remaining employees 2020: 18 employees left During 2021 through 2022, 400 employees exercised their options while the remaining employees allowed the options to lapse. How much is the share premium recognized upon exercise of the options? * E O 1,200,000 O 2,000,000 O 3,600,000 O 800,000
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