Reference no: EM132965731

Question 1 - Elvis Limited granted 1,000 share options to each of its 400 employees on 1 January 2019, with the condition that they continue to work for Elvis Limited for 3 years from the grant date. The fair value of each option on 1 January 2019 was $8.

35 employees left in the year to 31 December 2019 and at that date another 80 were expected to leave over the next two years. 28 employees left in the year to 31 December 2020 and at that date another 34 were expected to leave in 2021.

Required - In accordance with HKFRS 2 Share-based payment:

(a) Calculate the charge to Elvis Limited's income statement for the year ended 31 December 2020 in respect of the share options; and

(b) Prepare the journal entry to record this charge.

Question 2 - Elvis Limited grants to each of its 10 executives a choice of receiving a cash payment equivalent to 1,000 shares or receiving 1,200 shares. The grant is conditional on the completion of 3 years' service with the company. If the share alternative is chosen, the shares must be held for 2 years after vesting date. At the grant date the company's share price is $25 per share. At the end of years 1, 2 and 3, the share price is $27, $28 and $30 respectively. The fair value of the share is $24 per share at grant date.

Required - Prepare the relevant journal entries for the above grant.