Page 429 - SBR Integrated Workbook STUDENT S18-J19
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Answers
Example 3
Market-based conditions
The share price condition is a market-based vesting condition. The likelihood
of this condition being met will have been factored in when calculating the fair
value of the share options at the grant date. Therefore, this condition can now
be ignored.
The expense is calculated as follows:
(8 – 2) × 1m options × $0.50 × ½ = $1.5 million
Dr Profit or loss $1.5m
Cr Equity $1.5m
Example 4
Modifications
Year ended 31 December 20X1
(20 – 1 – 1) × 300,000 × $7 × 1/3 = $1,260,000
Dr Profit or loss $1,260,000
Cr Equity $1,260,000
Year ended 31 December 20X2
Original FV: (20 – 1 – 2 – 1) × 300,000 × $7 × 2/3 = $2,240,000
Modification: (20 – 1 – 2 – 1) × 300,000 × ($6 – $2) × 1/2 = $960,000
–––––––––
Cr Equity $3,200,000
Dr Profit or loss ($3,200,000 – $1,260,000) $1,940,000
Cr Equity $1,940,000
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