Share based payment

When the incremental fair value increases the fair value of the options granted, the incremental fair value is recognised as expenses over the remaining vesting period. BUT, the incremental fair value is the difference between the "Fair value of the modified option estimated on the date of modification"
 and the "Fair value of the original option estimated on the date of modification".

We would have accounted for a total value of service of Rs. 15 (15-14), had there been no fair value of original option specified in the question.

But since the fair value of original option has been provided, we will provide for a total service cost of Rs. 16, i.e 14 + (15-13)

Hope that answers your query.

Hi,

Thanks for the reply

But my question is intially we are recognising Rs.14 and due to modification the fair value of the option as on the of modification is Rs.15,So im my opinion we should recognise Rs.15(14+1) but in material Rs.16 has been recognised

As far as i comprehend it, relates back to the consideration of prudence of having taken 14 + (15-13), recognising cost from the lesser option. Nevertheless, share based payments dint come this time.

MY QUESTION WAS EXACTLY SAME THAT

while recognizing expenses for the share based payments, when there is a change in Fair value then why the decrease is ignored and in the case of increase too only the incremental part is considered and not the revised fair value . I mean what's the logic behind that.  

for eq. if the fair value considered earlier was 15 for recognition of expenses , and after that there is a reduction in exercise price ie. originally FV before reduction is 14 and after reduction it is 17  then we have to consider 15+3 ie. 18 as a FV to recognize. not the 17 why???

BUT  IT IS NOT YET SOLVED.