Calculate the amount that shall be recognized

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Question - At 1.1.2017, KAZA Bhd grants 80,000 share appreciation rights to employee, with service condition that the employee will still be employed in KAZA for three years. At grant date, KAZA's share price is RM3.00. The rights grants have a life of five years. At 31.12.2019, employee will be received cash by KAZA based on the value of the rights on that date. At the end of years 2020 and 2021, KAZA will pay the further cash to the employee if the rights have appreciated in value. Fair value of the share appreciation rights for the five-years are as follows:

Year

Share price (RM)

Dividend yield (%)

Value of rights

0

3.00

1

0.81

2017

3.60

1.5

1.05

2018

4.20

1.5

1.39

2019

4.80

2

1.67

2020

5.50

2

2.09

2021

6.20

3

2.67

Required -

a) Calculate the amount that shall be recognized for the employee service in each of the five year period.

b) Show the journal entry in each year.

Reference no: EM133188098

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