Exam 14: Share Based Payment

On 1 July 2022, Geoffrey Limited granted 250 options to each of its 100 employees. The options are conditional on the employees remaining with the company for the 2 year vesting period. The options have a fair value of $15 at vesting date. In addition, the shares will vest as follows: On 30 June 2023 if the company's earnings have increased by more than 15%. On 30 June 2024 if the company's earnings have increased by more than 12% averaged across the 2 year period. At 30 June 2033 Geoffrey's earnings have increased by 12% and 5 employees have left. The company expects that earnings will continue to increase at a similar rate during the year to 30 June 2024 and that the shares will vest at that time. It also expects that a further 7 employees will leave during the year. The remuneration expense for the year ended 30 June 2022 for Geoffrey is:

In relation to equity instruments granted by an entity where the entity makes modifications to the terms and conditions attaching to the grant:

Which of the following is not within the scope of AASB 2 Share-based Payment?

On 1 July 2021 Pearl Pty Ltd granted 800 share options with an exercise price of $35 to the Finance Director, conditional on the Finance Director remaining in employment with the company until 30 June 2024. The fair value of Pearl's shares at that time were assessed to be $40. The exercise price will drop to $30 if Pearl's earnings increase by an average of 8% per year over the three year period. On 1 July 2021 the estimated fair value of the share options with an exercise price of $35 is $10 per option, and if the exercise price is $30, the estimated fair value of the options is $12 per option. During the year ended 30 June 2022 Pearl's earnings increased by 10% and they are expected to continue to increase at this rate over the next two years. During the year ended 30 June 2023 Pearl's earnings increased by 9% and Pearl management continued to expect that the earnings target would be achieved. During the year ended 30 June 2024 Pearl's earnings increased by only 2%. At 30 June 2024 the share price is $23. The remuneration expense to be recognised for the year ended 30 June 2022 is:

A share-based payment transaction in which the entity receives goods or services as consideration for equity instruments of the entity is classified, in AASB 2 Share-based Payment, as:

Which of the following statements in relation to disclosures required under AASB 2 Share-based Payment is not correct?

How are reload features accounted for?

On 1 July 2021, Norman Pty Ltd granted 100 options to each of its 50 employees. The options are conditional on the employees remaining with the company for the 3 year vesting period. The options have a fair value of $5.00 at vesting date. In addition, the shares will vest as follows: On 30 June 2022 if the company's earnings have increased by more than 12%. On 30 June 2023 if the company's earnings have increased by more than 10% averaged across the 2 year period. On 30 June 2024 if the company's earnings have increased by more than 8% averaged across the 3 year period. At 30 June 2022 Norman Pty Ltd's earnings have increased by 11% and 2 employees have left. The company expects that earnings will continue to increase at a similar rate during the year to 30 June 2023 and that the shares will vest at that time. It also expects that a further 3 employees will leave during the year. The remuneration expense for the year ended 30 June 2022 for Norman Pty Ltd is:

Which of the following is within the scope of AASB 2 Share-based Payment?

In relation to modifications to the terms and conditions on which equity instruments were granted as part of an employee share scheme, which of the following statements is correct?

On 1 July 2021 Lucas Ltd grants 100 options to each of its 40 employees conditional on the employee remaining in service over the next three years. The fair value of each option is estimated to be $12. Lucas also estimates that 10 employees will leave over the three year vesting period. By 30 June 2022 four employees have left and the entity estimates that a further eight employees will leave over the next two years. On 30 June 2022 Luca decided to reprice its share options, due to a fall in its share price over the last 12 months. At the date of repricing, Lucas estimates that the fair value of each original option is $3 and the fair value of each repriced option is $5. During the year ended 30 June 2023 a further four employees left and Lucas estimates that another four employees will leave during the next year. During the year ended 30 June 2024 only three employees left. The share options vested on 30 June 2024. The remuneration expense for the year ended 30 June 2022 is:

Bolder Limited grants 1000 share options to each of its 80 employees. Each grant is conditional on the employee working for the company for the next two years. The fair value of each option is estimated to be $10.00 at grant date and $12.50 at vesting date. The amount to be recognised as an expense by Bolder Limited in year 2 is:

In a share based payment transaction where the entity has settlement choice, which of the following statements is true?

On 1 July 2021 Lucas Ltd grants 100 options to each of its 40 employees conditional on the employee remaining in service over the next three years. The fair value of each option is estimated to be $12. Lucas also estimates that 10 employees will leave over the three year vesting period. By 30 June 2022 four employees have left and the entity estimates that a further eight employees will leave over the next two years. On 30 June 2022 Luca decided to reprice its share options, due to a fall in its share price over the last 12 months. At the date of repricing, Lucas estimates that the fair value of each original option is $3 and the fair value of each repriced option is $5. During the year ended 30 June 2023 a further four employees left and Lucas estimates that another six employees will leave during the next year. During the year ended 30 June 2024 only three employees left. The share options vested on 30 June 2024. The cumulative remuneration expense for the year ended 30 June 2023 is:

Abbott Limited grants 500 share options to each of its 20 employees. Each grant is conditional on the employee working for the company for the next three years. The fair value of each option is estimated to be $6.00 at grant date and $8.00 at vesting date. The amount to be recognised as an expense by Abbott Limited in year 2 is:

On 1 July 2019 Fraser Ltd granted 200 options to each of its 100 employees. The share options will vest on 30 June 2021 if the employees remain employed with the company on that date. The share options have a life of four years. The exercise price is $10, which is also Fraser's share price at the grant date. Fraser is unable to reliably estimate the fair value of the share options at the grant date. Fraser's share price and the number of options exercised are set out below. Share options may only be exercised at year end. Year ended Share price at year end Number of options exercised at year end 30 Jure 2020 \ 11 - 30 Jurne 2021 \ 12 - 30 Jure 2022 \ 13 8200 30 Jure 2023 \ 14 10000 The formula to calculate the remuneration expense for the year ended 30 June 2022 is:

On 1 July 2021 Salt & Pepper Limited granted 200 share options to each of its 50 employees. Each grant is conditional on the employee working for the company for the next two years. The fair value of each option is estimated to be $8.00. Salt & Pepper estimates that 6% of its employees will leave during the two year period and therefore forfeit their rights to the share options. During the year ended 30 June 2022 five employees left. At this time the company revised its estimate of total employee departures over the full two-year period to 10%. During the year ended 30 June 2023 a further 4 employees left. The amount to be recognised as an expense by Salt & Pepper for the year ended 30 June 2022 is:

Which of the following disclosures is not required under AASB 2 Share-based Payment?

On 1 July 2021 Pearl Pty Ltd granted 800 share options with an exercise price of $35 to the Finance Director, conditional on the Finance Director remaining in employment with the company until 30 June 2024. The fair value of Pearl's shares at that time were assessed to be $40. The exercise price will drop to $30 if Pearl's earnings increase by an average of 8% per year over the three year period. On 1 July 2021 the estimated fair value of the share options with an exercise price of $35 is $10 per option, and if the exercise price is $30, the estimated fair value of the options is $12 per option. During the year ended 30 June 2022 Pearl's earnings increased by 10% and they are expected to continue to increase at this rate over the next two years. During the year ended 30 June 2023 Pearl's earnings increased by 9% and Pearl management continued to expect that the earnings target would be achieved. During the year ended 30 June 2024 Pearl's earnings increased by only 2%. At 30 June 2024 the share price is $23. Assuming that the Finance Director decides not to exercise his options at 30 June 2024, the following entry would be recorded:

On 1 July 2019 Fraser Ltd granted 200 options to each of its 100 employees. The share options will vest on 30 June 2021 if the employees remain employed with the company on that date. The share options have a life of four years. The exercise price is $10, which is also Fraser's share price at the grant date. Fraser is unable to reliably estimate the fair value of the share options at the grant date. Fraser's share price and the number of options exercised are set out below. Share options may only be exercised at year end. Year ended Share price at year end Number of options exercised at year end 30 Jure 2020 \ 11 - 30 Jurne 2021 \ 12 - 30 Jure 2022 \ 13 8200 30 Jure 2023 \ 14 10000 The cumulative remuneration expense to be recognised by Fantasy as at 30 June 2021 is: