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- This topic has 3 replies, 2 voices, and was last updated 1 year ago by Stephen Widberg.
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- May 28, 2023 at 4:22 pm #685241
Part of BPP kit ques 14:
“…Hammond Co had previously granted a share-based payment to its employees with a three-year vesting period. At 1 July 20X7, the employees had completed their service period but had not yet exercised their options. The fair value of the options granted at 1 July 20X7 was $15 million. As part of the acquisition, Luploid Co is obliged to replace the share-based payment scheme of Hammond Co with a scheme of its own which has the following details:
Luploid Co issued 100 options to each of Hammond Co’s 10,000 employees on 1 July 20X7. The shares are conditional on the employees completing a further two years of service…”The solution says this:
“…There is, however, a post combination service period which means that the portion of the replacement scheme attributable to pre-combination service is the market value of the acquire award multiplied by the ratio of the portion of the vesting period completed to the greater of the total vesting period or the original vesting period of the acquire award…”This might be silly but I did not really understand this part of the solution, I hadn’t come across this in the lectures either. Why are we doing this calculation, especially finding the greater of the two?
May 29, 2023 at 6:30 am #685272It seems to be a rather obscure rule, examined only once as far as I know.
If you are interested refer to KPMG guide:
https://assets.kpmg.com/content/dam/kpmg/be/pdf/2019/01/ifrs-2-handbook-2018.pdf
Please watch my debrief of this question in our revision lectures (Q1 in Sept Dec 19 exam)
May 29, 2023 at 7:49 am #685280okay sir, thank you.
May 30, 2023 at 6:54 am #685430🙂
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