Reference no: EM133125506
Question - On January 1, 2022, the board of directors of On-Jo Inc. authorized the grant of share options to supplement the salaries of 100 employees. Each share option permits the purchase of one share of Punk ordinary share at a price of P25 per share (par value P20). The market price of the stock on January 1, 2022 is P40 per share.
The option which has a market value of P25 vests, or become exercisable, beginning on January 1, 2025, if the employees stay with the company for the entire three-year vesting period and provided further those sales at the end of the vesting period reaches P100M mark, option to vest is at 100 option per employee; if sales reach P125M mark, options to vest is at 150 options per employee; if sales reach P150M mark, options to vest is at 200 options per employee. The options expire on December 31, 2026.
The following information were deemed relevant for the computation of the compensation expense for each year:
|
Date
|
Estimated number of Employees who will leave the company
|
Actual Sales as reported per year
|
|
Dec. 31, 2022
|
25
|
P75M
|
|
Dec. 31, 2023
|
20
|
P110
|
|
Dec. 31, 2024
|
16*
|
P150
|
*Actual number of employees who left the company.
Based on historical performance, the company estimates that the average annual sales increase in the past years of 20% is expected to remain during the entire vesting period.
Required -
How much is the compensation expense in 2023?
How much is the compensation expense in 2024?