Ch. 22 - Share Based Payment

Question 1

Two primary ways of share based payment

Answer 1

1. share options

2. share appreciation rights

Question 2

The vesting period is:

Answer 2

the period between the grant date and the vesting date

Question 3

When to recognize the expense related to stock options

Answer 3

over the vesting period

Question 4

How to record compensation expense related to share options (Dr. / Cr.)

Answer 4

Dr. compensation expense

Cr. Contributed surplus - share options

Question 5

Share options are derecognized for two reasons:

Answer 5

1. the option is redeemed

2. the option expires

Question 6

How to record option redemption:

Answer 6

Dr. Cash
Dr. Contributed Surplus - Share Options
Cr. Common Shares

Question 7

How to record option expiration:

Answer 7

Dr. Contributed Surplus - Share Options

Cr. Contributed Surplus - Expired Options

Question 8

Cash Settled SARs - recognition (when recorded)

Answer 8

recorded over the vesting period

Question 9

Cash Settled SARs - how to record expense (Dr. / Cr.)

Answer 9

Dr. Compensation expense

Cr. SAR liability

Question 10

SAR derecognition - two reasons

Answer 10

1. SARs are redeemed

2. SARs expire

Question 11

SAR Derecognition - how to record cash payout (Dr./Cr.)

Answer 11

Dr. SAR Liability

Cr. Cash

Question 12

SAR Derecognition - how to record expiration (Dr./Cr.)

Answer 12

Dr. Liability

Cr. Compensation Expense

Question 13

SAR Derecognition - calculation for share payout

Answer 13

of SARs
x (market price - benchmark price)
/ market price

Question 14

ASPE - SAR derecognition for cash payout

Answer 14

ASPE uses the intrinsic value (market price - exercise price) instead of fair value