Set 6 FR 22 Share-based payment

Question 1

Share options - initial measurement. How does vesting period affect?

Answer 1

FV using option pricing model at grant date. Not revalued over vesting period. NO ENTRY AT THIS TIME

Question 2

Compenstion expense for share options JE

Answer 2

DR Comp exp, CR Contributed Surplus. = FV at grant date x % expected to vest x proportion of vesting period

Question 3

Two reasons derecognition happens and journals

Answer 3

1. Option is exercised. DR cash, DR contributed surplus - share option, CR Common shares
2. Option is not exercised. DR contributed surplus - share option, CR contributed surplus - expired share options

Question 4

Difference between share options and SAR’s

Answer 4

No cash paid by employees for option under SAR’s

Question 5

SAR’s- initial measurement. How does vesting period affect?

Answer 5

Fair value using option pricing model at grant date. They ARE revalued at each reporting period.

Question 6

Compenstion expense for SAR - are these revalued?

Answer 6

DR comp expense, CR SAR liability. Fair value x % expected to vest x proportion of vesting period. YES they are revalued

Question 7

Two reasons derecognition happens and journals

Answer 7

1. Redeemed by employee - DR SAR Liability, CR Cash

2. Expire, DR SAR liability - CR Comp expense

Question 8

ASPE vs IFRS

Answer 8

For cash-settled SARs, ASPE uses intrinsic value (market price - exercise price) not FV