On 1 July 2013 Pearl Pty Ltd Granted 800 Share

On 1 July 2013 Pearl Pty Ltd granted 800 share options with an exercise price of €35 to the CFO, conditional on the CFO remaining in employment with the company until 30 June 2016. The fair value of Pearl's shares at that time was assessed to be €40. The exercise price will drop to €30 if Pearl's earnings increase by an average of 8% per year over the three year period. On 1 July 2013 the estimated fair value of the share options with an exercise price of €35 is €10 per option, and if the exercise price is €30, the estimated fair value of the options is €12 per option. During the year ended 30 June 2014 Pearl's earnings increased by 10% and they are expected to continue to increase at this rate over the next two years. During the year ended 30 June 2015 Pearl's earnings increased by 9% and Pearl management continued to expect that the earnings target would be achieved. During the year ended 30 June 2016 Pearl's earnings increased by only 2%. At 30 June 2016 the share price is €23. The remuneration expense to be recognised for the year ended 30 June 2014 is:

A) €2667
B) €3200
C) €8000
D) €9600

Correct Answer:

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