TOPIC FOUR

SHARE-BASED PAYMENT
QUESTIONS
Equity-settled share-based payment transaction
Question One
On January 2010 an entity grants 150 share options to each of its 300 employees. Each grant is
conditional upon the employee working for the entity until 31 December 2014. The fair value of
each of the share option is N10.
During 2010 sixty employees left and the entity estimated that 30% of the remaining employees
will leave during the four-year period.
During 2011 a further fifty employees left and the entity now estimated that 40% of the
remaining employees will leave during the four-year period.
During 2012, a further twenty employees left and the company now estimates that 20% of the
remaining employees will leave during the two year period.
During 2013, a further thirty employees left and the company now estimates that 10% of the
remaining employees will leave during 2014.
During 2014 a further fifteen employees left.
Required: Calculate the amount to be recognized in the income statement for each of the five
years ended 31st December 2014 and the amount that will appear in the statement of financial
position at 31st December for each of the five years.

Question Two
On January 2015 an entity grants 100 share options to each of its 400 employees. Each grant is
conditional upon the employee working for the entity until 31 December 2015. The fair value of
each of the share option is N20.
During 2015 20 employees left and the entity estimated that 20% of the employees will leave
during the three-year period.
During 2016 a further 25 employees left and the entity now estimated that 25% of its employees
will leave during the three-year period.
During 2017 a further 10 employees left.
Required: Calculate the remuneration expense that will be recognized in respect of the share-
based payment transaction for each of the three years ended 31 December 2017.

Question Three
On 1st January 2014 Mayor Ltd entity grants 200 share options to each of its 500 employees.
Each grant is conditional upon the employee working for the entity until 31 December 2017. The
fair value of each of the share option is N30.
During 2014 fifty employees left and the entity estimated that 30% of the employees will leave
during the four-year period.
During 2015 a further twenty employees left and the company now estimates that 40% of its
employees will leave during the four-year period.
During 2016 a further seventy employees left and the company now estimates that 35% of its
employees will leave during the four-year period.
During 2017 a further twenty employees left.
Required: Calculate the be recognized in the income statement for each of the four years ended
31st December 2017 and the amount that will appear in the statement of financial position at 31 st
December for each of the four years.
.
Cash-settled share-based payment transaction
Question Four
On 1 January 2001 an entity grants 100 cash share appreciation rights (SARS) to each of its 500
employees, on condition that the employees continue to work for the entity until 31 December
2005.
During 2005, 35 employees left. The entity estimates that a further 60 will leave during 2006 and
2007.
During 2006, 40 employees left and the entity estimates that a further 25 will leave during 2007.
During 2007 22 employees left.
At 31 December 2007 150 employees exercise their SARs. Another 140 employees exercise their
SARs at 31 December 2008 and the remaining 113 employees exercise their SARs at the end of
2009.
The fair value of SARs for each year in which a liability exists are shown below, together with
the intrinsic values at the dates of exercise.
Fair value Intrinsic value
N N
2005 14.40
2006 15.50
2007 18.20 15.00
2008 21.40 20.00
2009 25.00

Required: Calculate the amount to be recognized in the profit and loss for each of the five years
ended 31 December 2009 and the liability to be recognized in the statement of financial position
at 31 December for each of the five years.

Question Five
On 1 January 2003 Akure Ltd grants 500 cash share appreciation rights (SARS) to each of its
400 employees, on condition that they continue to work for the entity until 31 December 2006.
During 2003, 50 employees left. The entity estimates that a further 80 will leave during the next
three years.
During 2004, 30 employees left and the entity estimates that a further 40 employees will leave
during 2005 and 2006.
During 2005, 15 employees left. The company estimates that a further 30 employees will leave
during 2006.
During 2006 10 employees left.
The fair value of SARs for each year is shown below:
 Date Fair value
N
2003 20
2004 25
2005 30
2006 35

Required: Calculate the amount to be recognized as an expense for each of the four years ended
31 December 2006 and the liability to be recognized in the statement of financial position at 31
December for each of the four years.