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What is the compensation expense

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Question - On January 1, 2018, AI UKO Company granted to a senior executive 50,000 share options, conditional upon the executive's remaining in the entity's employ until December 31, 2020. The par value per share is P100. The exercise price is P130.

However, the exercise price drops to P100 if the entity's earnings increase by at least an average of 12% per year over the three-year period.

On grant date, the entity estimated that the fair value of the share option is P42 if the exercise price is P130. If the exercise price is P100, the fair value is P51.

During 2018, 2019, and 2020, the earnings increased by 14%, 9%, 13%, respectively. All share options were exercised on December 31, 2020.

Required -

1. What is the compensation expense for 2018?

2. What is the compensation expense for 2019?

3. What is the compensation expense for 2020?

4. What is the share premium upon exercise of the share options on December 31, 2020?

Reference no: EM133156986

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