Reference no: EM132508699
Point 1: On January 2, 2018, the shareholders of Mari Company approved a plan that grants the company's four executives options to purchase 2,000 shares each of the company's P50 par value ordinary share. The options are granted on January 2, 2018 and may be exercised anytime from January 1, 2020 to December 31, 2020. Based on an option-pricing model used by the enterprise, the fair value of the option on January 2, 2018 is P35. The option price per share is P60 and the market price of the ordinary shares on January 2, 2018 is P90 per share
Point 2: Assume that all four executives who have been granted the share options stayed with the company until the end of 2019. Hence, all the options vested. On June 30, 2020, one of the executives resigned from the company without exercising the options. Thus, 2,000 options were cancelled. All the remaining options were exercised on December 31, 2020
Required:
Question 1: Entries to record the above transactions.
Part :
Camil Company granted 100 shares option to each of its 500 employees on January 1, 2018. The option plan allows the employees to purchase a share of the entity's P100 par value ordinary share capital at P120. On January 1, 2018, the fair value of each option was determined to be P24 based on option pricing model used by the company. The option plan requires the employees receiving the options to be in the employ of the company at least until December 31, 2020. Options are exercisable starting January 1, 2021 and expire on December 31, 2022.
Actual and revised estimates of employees leaving the company during 2018, 2019 and 2020 are as follows:
2018: 25 employees left; 30 more employees are expected to leave before December 31, 2020
2019: 20 employees left; 15 more employees are expected to leave before December 31, 2020.
2020: 10 employees left.
- Of the 44,500 options vested, 44,000 were exercised on December 31, 2021 and the remainder lapsed.
Required:
Question 2: Compute the amount of compensation expense to be recognized, as a result of the share option plan during 2018, 2019, and 2020.
Question 3: Journal entries to the above transactions from 2018 to 2022.