Page 492 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

F2: Advanced Financial Reporting

4.3 $104,000

SAR’s are valued using:

 the fair value as at the reporting date
 expected number of SAR’s to vest

 spread over the vesting date

Expense in year ended 31st Dec 20X4

FV = 12

Expected SAR’s to vest = (10 – 1 – 2) × 2000 = 14,000

Total cost = FV × expected to vest = 12 × 14,000 = 168,000

Spread over vesting period /3

Amount recognised as an expense in 20X4 = $56,000

Expense in year ended 31st Dec 20X5

FV = 15

Expected SAR’s to vest = (10 – 1 – 1) × 2000 = 16,000

Total cost = FV × expected to vest = 15 × 16,000 = £240,000

Spread over vesting period 2/3 = $160,000

Amount recognised in 20X4 = ($56,000)

Amount recognised as an expense in 20X5 (160,000- 56,000) = $104,000

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