Find the amount to be recognized as expense in year three

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Question - At the beginning of year 1, Dickenson Corporation grants 100 share options to each of its 200 employees. Each grant is conditional upon the employee remaining in service over the next three years. The entity estimates that the fair value of each option is P21. On the basis of a weighted average probability, the entity estimates that 60 employees will leave during the three-year period and therefore forfeit their rights to the share options. Suppose that 15 employees leave during year 1. Also suppose that by the end of year 1, the entity's share price has dropped, and the entity reprices its share options, and that the repriced share options vest at the end of year 3. The entity estimates that a further 35 employees will leave during years 2 and 3. During year 2, a further 10 employees leave, and the entity estimates that a further 10 employees will leave during year 3. During year 3, a total of 8 employees leave. The entity estimates that, at the date of repricing, the fair value of each of the original share options granted (i.e., before taking into account the repricing) is P10 and that the fair value of each repriced share option is P13. Find the amount to be recognized as expense in year 3?

Reference no: EM132945945

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