Reference no: EM132724727

Questions -

1. Under the executive share option plan, Ariel and Aimee Company granted options on January 1, 2020 that permit executives to purchase 15,000 P100 par ordinary shares within the next eight years but not before December 31, 2022.

2. On January 1, 2020, Megaldon Company had issued executive share options permitting executives to buy 40,000 shares for P25 per share. The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting). Vesting date: December 31, 2020, Amount vesting: 20%, Fair value per option: 10; Vesting date: December 31, 2021, Amount vesting: 30%, Fair value per option: 15; Vesting date: December 31, 2022, Amount vesting: 50%, Fair value per option: 20. Assuming the entity used the straight line method, what amount of compensation expense should be recorded in 2020?

3. On January 1, 2020, Shancey Corporation purchased an equipment with a cash price of P2,000,000. The supplier can choose how the purchase is to be settled. The choices are 20,000 shares with par value of P50 in one year's time, or a cash payment equal to the market value of 15,000 phantom shares on December 31, 2020. At grant date on January 1, 2020, the market price of each share is P80 and on the date of settlement on December 31, 2020, the market price of each share is P100.

Required -

A. What is the equity component arising from the purchase of equipment with share and cash alternative?

B. What amount of interest expense should be recognized on December 31, 2020 if the supplier has chosen the cash alternative?

C. What amount should be recognized as share premium on December 31, 2020 if the supplier has chosen the share alternative?