dear sir,
can you just explain me whether solution given for q5 of may 2018 rtp of esop of old course is correct with regards to expenses of esop to be recognized at 18(which is option price)instead at difference between option price and market price.
3 Replies
suman yadav
(16 Points)
Replied 15 April 2018
PQ Ltd. grants 100 stock options to each of its 1,000 employees on 1-4-2015, conditional
upon the employee remaining in the company for 2 years. The fair value of the option is
` 18 on the grant date and the exercise price is ` 55 per share. The other information is
given as under:
(i) Number of employees expected to satisfy service condition are 930 in the 1st year
and 850 in the 2nd year.
(ii) 40 employees left the company in the 1st year of service and 880 employees have
actually completed 2 year vesting period.
You are required to compute ESOP cost to be amortized by PQ Ltd. in the years 2015-
2016 and 2016-2017
Roshni
(Student CA IPC / IPCC)
(27 Points)
Replied 09 May 2018
Hi, This is relating to CA Final concept - Share-based payment (Type of Transaction - Equity settled).
The employer receives services as consideration for ESOP option. Hence, total FV of the option is considered as Employees compensation cost unlike the differences what we work out in IPCC basic ESOP model sums.
Hope this helps!
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