Page 91 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Share-based payments

Example 4.1

Nguyen offers a share based payment scheme to its managers. On the
1 January 20X5, 300 staff members receive 100 share options each. They must
work for the company for the next three years and the options become
exercisable on 31 December 20X7. The fair value at 1 January 20X5 is $10 per
option. At the 31 December 20X5, the fair value is $12 per option.

In the year ending 31 December 20X5, 20 staff leave and it is thought that
during the three year vesting period, the total amount leaving will be 20%.

In 20X6, a further 15 leave but the estimate of total leaving is now reduced to
15%. In the final year, 15 staff left.

Required:

Calculate the expense to be charged in the statement of profit or loss and
the balance on the equity reserve that would be shown at the reporting
date for each of the three years ended 31 December 20X5, 20X6 and 20X7.

83