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- This topic has 7 replies, 2 voices, and was last updated 3 years ago by Stephen Widberg.
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- August 21, 2021 at 5:54 am #632369
Dear Sir,
The answer key calculates the value of the share based payment based on the number of employees expected to leave at the start of the year/scheme.
Aren’t we supposed to take the year-end estimate of number of employees who are expected to leave for the calculation of the SBP?
If so, the calculation would be 100*10000*96%*20 for the year end equity.
Deducting the amount which was already considered in part c (i) of $9m would provide the expense for the year, is it not?
August 21, 2021 at 7:26 am #632374Do you mean the expense for the new scheme?
I’m looking at Kaplan kit which shows the new scheme expense / equity as 9.6m. As this is the first year of the new scheme there is no brought forward figure.
August 30, 2021 at 8:05 am #633470Sir,
I understand that there is no b/f figure but the percentage of employees who are expected to leave during the year are expected to be 10% at the start of the year and 4% at the end of the year.
In order to calculate the expense/equity, we use the year end estimate (my calculation in the previous post). However, they are using the start of the year estimate (100*10000*90%*20)
I don’t understand why they have done that.
Thank you
August 30, 2021 at 3:14 pm #633528Which kit are you using? (Remember to always use an exam kit not the original model answer)
BPP – $9m which is FV of replacement scheme at grant date
KAP – P&L charge $9.6mSo each kit is calculating a different number for a different reason
August 31, 2021 at 7:10 am #633586I was using the original model answer, but i think it is the same as the BPP kit.
Can you please explain why they are using the initial percentage of leavers in the BPP kit?
August 31, 2021 at 9:16 am #633623The BPP kit is NOT calculating the P&L charge. It is calculating the FV of the scheme at the grant date – a completely different thing. At the grant date you would only be aware of circumstances at the grant date.
August 31, 2021 at 9:26 am #633627Okay, thank you!!
September 1, 2021 at 7:26 am #633749My pleasure
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