Actg MCQ

Problem 21 – 21 (IFRS)
On January 1, 2016, Nova Company granted share options to each of the 300 employees
working in the sales department. The option price is P80 and the par value is P50 per share.
The share options vest at the end of a three-year period provided that the employees remain in
the entity’s employ and provided the volume of sales will increase by 10% per year.
The fair value of each share option on grant date is P30. If the sales increase by 10%, each
employee will receive 200 share options.
If the sales increase by 15%, each employee will receive 300 share options.
m
On December 31, 2016, the sales increased by 10%, and no employees have left the entity.
er as
co
On December 31, 2017, the sales increased by 15%, and no employees have left.
eH w
On December 31, 2018, the sales increased by 15%, and 50 employees left the entity.
o.
rs e
1. What is the compensation expense for 2018?
ou urc
a. 1, 200, 000
o
b. 2, 250, 000
aC s
c. 900, 000
vi y re
d. 450, 000
2. What is the share premium upon exercise of the share options on December 31, 2018?
ed d
ar stu
a. 4, 500, 000
b. 2, 250, 000
is
c. 2, 700, 000
Th
d. 4, 950, 000
sh
On January 1, 2016, Alterra Company granted 60, 000 share options to employees. The share
options will vest at the end of three years provided the employees remain in service until then.
The option price is P60 and the par value per share is P50.
This study source was downloaded by 100000835424757 from CourseHero.com on 11-16-2021 20:48:51 GMT -06:00
https://www.coursehero.com/file/20150980/chapter-21-problems/
At the date of grant, the entity concluded that the fair value of the share options cannot be
measured reliably.
The share options have a life of 4 years which means that the share options can be exercised
within one year after vesting.
The share prices are P62 on December 31, 2016, P66 on December 31, 2017, P75 on
December 31, 2018 and P85 on December 31, 2019. All share options were exercised on
December 31, 2019.
a. 120, 000
b. 240, 000
c. 200, 000
m
er as
d. 660, 000
co
eH w
o.
a. 900, 000
rs e
ou urc
b. 600, 000
c. 660, 000
o
d. 450, 000
aC s
vi y re
3. What is the share premium upon exercise of the share options on December 31, 2019?
a. 2, 100, 000
ed d
b. 1, 500, 000
ar stu
c. 600, 000
d. 900, 000
is
Th
Problem 21 – 23 (IAA)
Vicar Company initiated a performance-based employee share option plan on January 1, 2016.
sh
The performance base for the plan is net sales in the year 2018.
The plan provides for share options to be awarded to the employees as a group on the following
basis:
Level Net sales range Options granted
1 Less than 2, 500, 000 10, 000
2 P2, 500, 000 - 4, 999, 999 20, 000
3 P5, 000, 000 - 10, 000, 000 30, 000
4 More than 10, 000, 000 40, 000
The options become exercisable on January 1, 2019. The option exercise price is P200 per
share. On January 1, 2016, each option had a fair value of P90.
The share market prices were:
January 1, 2016 250
December 31, 2016 300
December 31, 2017 350
m
er as
December 31, 2018 320
co
eH w
The entity reported the following sales each year:
o.
2016
rs e 4, 500, 000
ou urc
2017 5, 500, 000
2018 7, 000, 000

o
aC s
What amount should be recognized as compensation expense for 2018?

vi y re
a. 1, 200, 000
b. 1, 800, 000
ed d
c. 600, 000
ar stu
d. 900, 000
is
Th
On January 1, 2014, Kit Company has granted share options to the employees. The total
expense to the vesting date on December 31, 2017 has been calculated at P8, 000, 000. The
entity has decided to settle the award early on December 31, 2016.
sh
The expense charged since the date of grant was P2, 000, 000 for 2014 and P2, 100, 000 for
2015. The expense that would have been charged for 2016 is P 2, 200, 000.
a. 2, 200, 000
b. 8, 000, 000
c. 3, 900, 000
d. 2, 000, 000
On January 1, 2014, Kristel Company has granted share options to the employees. The total
compensation expense to the vesting date on December 31, 2017 has been calculated at P6,
000, 000. The entity has decided to settle the award early on December 31, 2016.
The compensation expense charged since the date of grant was P1, 500, 000 for 2014 and P1,
300, 000 for 2015. The compensation expense that would have been charged for 2016 is P 1,
200, 000.
What amount should be recognized as compensation expense for 2016, assuming the share
m
options are not exercised but instead, the entity paid the employees P5, 000, 000 on December
er as
31, 2016?
co
eH w
a. 5, 000, 000
o.
b. 2, 200, 000
rs e
ou urc
c. 3, 200, 000
d. 0
o
aC s
vi y re
Problem 21 – 26 (AICPA Adapted)
On January 1, 2016, Jeffrey Company granted an employee an option to purchase 30, 000
ed d
shares of P5 par value at P20 per share.

ar stu
The option became exercisable on December 31, 2017, after the employee completed two
years of service. The option was exercised on January 10, 2018.
is
Th
Market price of share Market price of share option
January 1, 2016 30 8
sh
December 31, 2017 50 9
January 10, 2018 45 11
a. 450, 000
b. 300, 000
c. 150, 000
d. 120, 000
Cemir Company established an employee share option plan on January 1, 2016. The plan
allows the employees to acquire 50, 000 shares of P5 par value at P70 per share when the
market price is P75. The options may not be exercised until five years from the grant date.
The risk-free interest rate is 6%, and the share is expected to pay dividend of P3 annually. The
fair value of a similar option at the grant date is P6.50.
m
What amount of deferred compensation expense should be recorded on January 1, 2016?
er as
co
a. 325, 000
eH w
b. 260, 000
o.
c. 100, 000 rs e
ou urc
d. 150, 000
o
(pg.948)
aC s

vi y re
On January 1, 2016, Klime Company granted Morgan, the president, compensatory share
options to buy 10, 000 ordinary shares of P10 par value. The options call for a price of P20 per
share and are exercisable in 3 years following the grant date.
ed d
ar stu
Morgan exercised the options on December 31, 2016. The market price of the share was P60
on January 1, 2016, and P70 on December 31, 2016. The fair value of the share option is P30
on the date of grant.
is
By what net amount should shareholders’ equity increase as a result of the grant and exercise
Th
of the options?
a. 200, 000
sh
b. 300, 000
c. 500, 000
d. 700, 000
On January 1, 2016, Jeanne Company granted Morgan, the president, compensatory share
options to buy 5, 000 ordinary shares of P100 par value. The options call for a price of P120 per
share and are exercisable in four years following the grant date. The president exercised the
options on December 31, 2016.
The market price of the share was P150 on January 1, 2016, and P180 on December 31, 2016.
The fair value of the share option with the same term was P60 on the date of grant.
a. 300, 000
b. 100, 000
c. 150, 000
m
er as
d. 75, 000
co
eH w
2. By what net amount should shareholders’ equity increase as a result of grant and exercise of
the options?
o.
a. 600, 000 rs e
ou urc
b. 900, 000
o
c. 500, 000
aC s
d. 750, 000
vi y re

ed d
ar stu
Gabriel Company’s employee share purchase plan specifies that for every P1 withheld from
employee’s wages for the purchase of Gabriel’s ordinary shares, Gabriel Company contributes
P2. The shares are purchased from Gabriel Company’s treasury shares at market price on the
is
date of purchase.
Th
During the current year, the employee withholding was P350, 000, the market value of 150, 000
shares issued was P1, 050, 000 and the carrying amount of treasury shares issued was P900,
000.
sh
What amount should be recognized as expense in the current year for the share purchase plan?
a. 1, 050, 000
b. 950, 000
c. 700, 000
d. 550, 000
Emerald Company issued fully paid shares to 200 employees on December 31, 2016. Normally,
shares issued to employees vest over a two-year period but these shares have been given as a
bonus to the employees because of their exceptional performance during the year.
The shares have a market value of P500, 000 on December 31, 2016 and an average fair value
of P600, 000 for the year.
What amount should be expensed for the share-based payment transaction?
a. 600, 000
m
b. 500, 000
er as
co
c. 300, 000
eH w
d. 250, 000
o.
rs e
ou urc
o
On June 30, 2016, Newman Company granted compensatory share options for 30, 000 P20 par
value ordinary shares to certain key employees. The market price of the share on that date was
aC s
P36 and the option price was P30.

vi y re
The Black – Scholes option pricing model measured the total compensation expense to be P5,
400, 000.
ed d
The options are exercisable beginning January 1, 2019, provided the key employees are still in
ar stu
entity’s employ at the time options are exercised. The options expire on June 30, 2020.
On January 15, 2019, when the market price of the share was P42, all 30, 000 options were
is
exercised.
Th
What amount of compensation expense should be recorded for 2018?
a. 2, 160, 000
sh
b. 2, 700, 000
c. 5, 400, 000
d. 0
On January 1, 2016, Greece Company granted an employee an option to buy 20, 000 shares
for P40 per share, the option exercisable for three years from January 1, 2018. The service
period is for two years beginning January 1, 2016.
Using a fair value option pricing model, total compensation expense is determined to be P240,
000. The employee exercised the option on September 1, 2018, and sold the 20, 000 shares on
December 1, 2018.
a. 240, 000
b. 120, 000
c. 160, 000
m
er as
d. 80, 000
co
eH w
o.
rs e
ou urc
o
aC s
vi y re
ed d
ar stu
is
Th
sh
Powered by TCPDF (www.tcpdf.org)

Actg MCQ

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Actg MCQ

Uploaded by

Copyright:

Available Formats

Problem 21 – 21 (IFRS)

1. What is the compensation expense for 2018?

Level Net sales range Options granted

2 P2, 500, 000 - 4, 999, 999 20, 000

3 P5, 000, 000 - 10, 000, 000 30, 000

4 More than 10, 000, 000 40, 000

The share market prices were:

January 1, 2016 250

December 31, 2016 300

December 31, 2017 350

2018 7, 000, 000

What amount should be recognized as compensation expense for 2018?

What amount should be recognized as compensation expense for 2016?

Problem 21 – 26 (AICPA Adapted)

shares of P5 par value at P20 per share.

Market price of share Market price of share option

December 31, 2017 50 9

January 10, 2018 45 11

What amount should be recognized as compensation expense for 2016?

Problem 21 – 28 (AICPA Adapted)

1. What is the compensation expense for 2016?

Problem 21 – 30 (AICPA Adapted)

What amount should be expensed for the share-based payment transaction?

P36 and the option price was P30.

What amount of compensation expense should be recorded for 2018?

What amount should be recognized as compensation expense for 2016?

You might also like