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Suggested Solutions Share Based Payment Compensation 5745 1

This document provides solutions to accounting problems involving share-based payment compensation. The high-level summaries are: 1. It calculates the current year compensation expense for several years for employees receiving share options or appreciation rights, allocated over the vesting period based on changes in share price. 2. It determines the compensation expense and cash payment for settling share options, and calculates the difference. 3. It allocates the total compensation expense for share appreciation rights over several years based on changes in share price from the grant date.

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68 views

Suggested Solutions Share Based Payment Compensation 5745 1

This document provides solutions to accounting problems involving share-based payment compensation. The high-level summaries are: 1. It calculates the current year compensation expense for several years for employees receiving share options or appreciation rights, allocated over the vesting period based on changes in share price. 2. It determines the compensation expense and cash payment for settling share options, and calculates the difference. 3. It allocates the total compensation expense for share appreciation rights over several years based on changes in share price from the grant date.

Uploaded by

cutieaiko
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PAGE 1

CPA REVIEW SCHOOL OF THE PHILIPPINES


Manila
PRACTICAL ACCOUNTING PROBLEMS I

Prac. 1 Handouts

SUGGESTED SOLUTIONS
SHARE BASED PAYMENT COMPENSATION 5745
1.
2013

(500 x 100) x 30 / 3

2014

(440 x 100) x 30 / 3 x 2

2015

(450 x 100) x 30

Total Comp.
Expense
500,000

Current Year
Comp. Expense
500,000

880,000

* 380,000

1,350,000

**470,000

* 880,000 500,000 = 380,000


** 1,350,000 880,000 = 470,000
2.1

2.2

Total compensation expense for vesting period


Less: Compensation expense recognized
2015 Compensation expense

6,000,000
2,800,000
3,200,000

Cash payment to settle share options


Less: Compensation expense recognized
2015 Compensation expense

5,000,000
2,800,000
2,200,000

3.

Total Comp.
Expense
40,000

Current Year
Comp. Expense
40,000

2013

60,000 x (62 60) / 3

2014

60,000 x (66 60) / 3 x 2

240,000

* 200,000

2015

60,000 x (75 60)

900,000

**660,000

2016

60,000 x (85 60)

1,500,000

***600,000

* 240,000 40,000 = 200,000


** 900,000 240,000 = 660,000
*** 1,500,000 900,000 = 600,000
4.

Total Comp.
Expense
400,000

Current Year
Comp. Expense
400,000

2013

50,000 x (124 100) / 3

2014

50,000 x (151 100) / 3 x 2

1,700,000

*1,300,000

2015

50,000 x (151 100)

2,550,000

**850,000

* 1,700,000 400,000 = 1,300,000


** 2,550,000 1,700,000 = 850,000
5.

6.

Liability for appreciation rights (50,000 x (115 100))


Less: Payment on December 31, 2009 (50,000 x (110 100))
Gain on reversal of share appreciation rights

750,000
500,000
250,000

Fair value of share alternative (25,000 x 48)


Fair value of cash alternative (20,000 x 51)
Fair value of equity component

1,200,000
1,020,000
180,000

Allocation of equity component over vesting period (180k / 3)


2013
Liability component:
(54 x 20,000) / 3
((66 x 20,000) / 3 x 2) 360,000
((65 x 20,000) (360,000 + 520,000)
Equity component
Total compensation expense

60,000
2014

2015

360,000
520,000
60,000
420,000

60,000
580,000

420,000
60,000
480,000

2.

Share premium under share alternative (1.3M + 180k) (25,000 x 30)

730,000

3.

Share premium under cash alternative

180,000

5745

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