Page 455 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Supplementary objective test questions

CHAPTER 4 – SHARE BASED PAYMENTS

4.1 Which of the following statements are true in relation to IFRS 2 Share
based payments?

A Vesting conditions must be based upon the employees’ period of
employment only

B All vesting conditions must be met for the options to be exercised

C The fair value at the year-end is used to value all share based payments

D The number of expected options to vest is estimated at the grant date with
no subsequent adjustment to the estimates

4.2 An entity granted 100 share options to 400 of its staff on the 1st January 20X6.
The options are vested if the employee is still employed by the entity as at
31st December 20X9.

The fair value of the option was $3 on the 1st January 20X6. This has risen to
$4 as at the 31st December 20X6.

20 staff left during 20X6 and it is expected that a further 20% of the remaining
staff will leave by the vesting date.

How much is the expense in relation to this share based payment for the
year ended 31st December 20X6?

4.3 JS granted 2000 share appreciation rights (SAR’s) each to 10 of the key
management within the business on the 1st January 20X4. The SAR’s will vest
if the directors remain in employment as at 31st December 20X6.

The fair value of the option is $10 on the 1st Jan 20X4. This has risen to $12 as
at the 31st Dec 20X4 and $15 as at the 31st Dec 20X5.

1 director left during 20X4 and, as at the 31st Dec 20X4, it was expected that
1 staff member per year will leave until the vesting date.

In 20X5, 1 director did leave but, due to the strong performance of JS during the
year, no further directors are expected to leave going forward.

How much is the expense in relation to this share based payment for the
year ended 31st December 20X5?

447