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  • Suggested Solutions Share Based Payment Compensation 5745 1

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    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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    5745

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    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.

    Copyright:

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    Download as PDF, TXT or read online from Scribd
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    34 views1 page

    Suggested Solutions Share Based Payment Compensation 5745 1

    Uploaded by

    cutieaiko
    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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    of 1

    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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