Page 430 - SBR Integrated Workbook STUDENT S18-J19
P. 430
Chapter 25
Example 5
Cancellation and settlement
Cancellation
At 30 June 20X5 the scheme is cancelled so the entity must recognise the
total cost of the scheme:
24 managers × 2,000 × $33 = $1,584,000
The amount already recognised in 20X4 would have been:
23 managers × 2,000 × $33 × 1/3 = $506,000
The entry required is therefore:
Dr Profit or loss ($1,584,000 – $506,000) $1,078,000
Cr Equity $1,078,000
Settlement
The compensation paid is: 2,000 × 24 × $63 = $3,024,000
Of this, the amount attributable to the fair value of the options cancelled is:
$2,880,000 (2,000 × 24 × $60). This is deducted from equity. The remaining
$144,000 ($3,024,000 – $2,880,000) is charged to profit or loss:
Dr Equity $2,880,000
Dr Profit or loss $144,000
Cr Cash $3,024,000
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