Reference no: EM132678529

Problem 1: On January 1, 2017, Celtics Company granted to a senior officer 10,000 share options conditional upon the executive remaining in the entity's employ until December 31, 2019. However, the share options cannot be exercised unless the share price has increased from P50 on January 1, 2017 to above P65 on December 31, 2019. If the share price is above P65 on December 31, 2019, the share options can be exercised at any time during the next 5 years. The entity applied a binomial option pricing model and estimated that the fair value of the share option with this market condition on the grant date is P24. What is the compensation expense for 2017?

Problem 2: The Amelia Corporation was incorporated on January 1, 2016, with the following authorized capitalization: 40,000 ordinary shares, no par value, stated value P40 per share 10,000 shares of 5 percent cumulative preference shares, par value P10 per share. During 2016, Amelia issued 24,000 ordinary shares for a total of P1,200,000 and 6,000 shares of preference shares at P16 per share. In addition, on December 20, 2016, subscriptions for 2,000 shares of preference shares were taken at a purchase price of P17. These subscribed shares were paid for on January 2, 2017. What should Amelia report as total contributed capital on its December 31, 2016, balance sheet?