Exam 9: Share-Based Payments

On 1 July 2013 Pepper Limited granted 500 share options to each of its 100 employees. Each grant is conditional on the employee working for the company for the next two years. The fair value of each option is estimated to be $3.00. Pepper estimates that 8% of its employees will leave during the two year period and therefore forfeit their rights to the share options. During the year ended 30 June 2014 five employees left. At this time the company revised its estimate of total employee departures over the full two-year period to 10%. During the year ended 30 June 2015 a further 4 employees left. The amount to be recognised as an expense by Pepper for the year ended 30 June 2014 is:

A share -based payment transaction in which the entity acquires goods or services by incurring liabilities to the supplier for amounts that are based on the value of the entity's shares or other equity instruments of the entity is classified in AASB 2 Share-based Payment as

On 1 July 2014 Luca Ltd grants 200 options to each of its 75 employees conditional on the employee remaining in service over the next two years. The fair value of each option is estimated to be $7. Luca estimates that 8 employees will leave over the two year vesting period. By 30 June 2015 four employees have left and the entity estimates that a further five employees will leave over the next year. On 30 June 2015 Luca decided to reprice its share options, due to a fall in its share price over the last 12 months. The repriced share options will vest on 30 June 2016. At the date of repricing Luca estimates that the fair value of each original option is $1.50 and the fair value of each repriced option is $3. During the year ended 30 June 2016 four employees left. The remuneration expense for the year ended 30 June 2015 is:

THE FOLLOWING INFORMATION RELATES TO QUESTIONS On 1 July 2013 Fantasy Ltd granted 200 options to each of its 100 employees. The share options will vest on 30 June 2015 if the employees remain employed with the company on that date. The share options have a life of four years. The exercise price is $5, which is also Fantasy's share price at the grant date. Fantasy is unable to reliably estimate the fair value of the share options at the grant date. Fantasy's share price and the number of options exercised are set out below. Share options may only be exercised at year end. Year ended Share price at year end Number of options exercised at year end 30 June 2014 \ 6 - 30 June 2015 \ 7 - 30 June 2016 \ 8 7800 30 June 2017 \ 9 10000 -The cumulative remuneration expense to be recognised by Fantasy as at 30 June 2015 is:

THE FOLLOWING INFORMATION RELATES TO QUESTIONS Viola Ltd has granted each of its 10 senior executives a choice between receiving a cash payment equivalent to 1000 shares or receiving 1200 share. The grant is conditional on the completion of three years service with the company. If the share alternative is chosen, the shares must be held for two years after vesting date. At grant date the company’s share price is $25 per share. At the end of years 1, 2 and 3 the share price is $27, $28 and $30 respectively. The company does not expect to pay dividends in the next three years. After taking into account the effect of post-vesting transfer restrictions the company estimates the grant-date fair value of the share alternative is $24 per share. -What is the fair value of the equity alternative?

On 1 July 2013 Poggio Ltd grants 300 options to each of its 100 employees conditional on the employee remaining in service over the next three years. The fair value of each option is estimated to be $12. Poggio estimates that 15 employees will leave over the three year vesting period. By 30 June 2014 four employees have left and the entity estimates that a further ten employees will leave over the next two years. On 30 June 2014 Poggio decided to reprice its share options, due to a fall in its share price over the last 12 months. The repriced share options will vest on 30 June 2016. At the date of repricing Poggio estimates that the fair value of each original option is $3 and the fair value of each repriced option is $5. During the year ended 30 June 2015 a further 6 employees leave and Poggio estimates that another 3 employees will leave during the year ended 30 June 2016. During the year ended 30 June 2016 four employees left. The entry at 30 June 2015 to account for the share based payment transaction is:

THE FOLLOWING INFORMATION RELATES TO QUESTIONS On 1 July 2013 Watson Pty Ltd granted 100 share appreciation rights (SARS) to each of its 50 employees, conditional on the employee not leaving the company in the next three years. The company estimates the fair value of the SARS at the end of each year in which a liability exists as shown in the table below. The intrinsic values of the SARS at the date of exercise at 30 June 2016, 2017 and 2018 are also shown. All SARS held by employees at 30 June 2016 vest. Year ended Fair value Intrinsic value 30 June 2014 \ 14.40 30 June 2015 \ 15.50 30 June 2016 \ 18.20 \ 15.00 30 June 2017 \ 21.40 \ 20.00 30 June 2018 \ 25.00 By 30 June 2016 nine employees have left and 15 employees have exercised their SARS. -This is an example of:

Salt Limited grants 1000 share options to each of its 100 employees. Each grant is conditional on the employee working for the company for the next two years. The fair value of each option is estimated to be $5.00 at grant date and $7.50 at vesting date. The amount to be recognised as an expense by Salt in year 2 is:

Which of the following statements in relation to disclosures required under AASB 2 Share-based Payment is NOT correct?

THE FOLLOWING INFORMATION RELATES TO QUESTIONS On 1 July 2013 Fantasy Ltd granted 200 options to each of its 100 employees. The share options will vest on 30 June 2015 if the employees remain employed with the company on that date. The share options have a life of four years. The exercise price is $5, which is also Fantasy's share price at the grant date. Fantasy is unable to reliably estimate the fair value of the share options at the grant date. Fantasy's share price and the number of options exercised are set out below. Share options may only be exercised at year end. Year ended Share price at year end Number of options exercised at year end 30 June 2014 \ 6 - 30 June 2015 \ 7 - 30 June 2016 \ 8 7800 30 June 2017 \ 9 10000 -The formula to calculate the remuneration expense for the year ended 30 June 2016 is: