ACCA SBR · Guided practice (Show me how)
Chapter 13: Share based payments (IFRS 2)
Cash-settled share-based payment
Example 5 - Options expected to be exercised (cash settled). On 1 January 2014, Cheddar granted 20,000 share appreciation rights to each of its ten directors. The condition attached to the cash settled share based payment scheme is that the directors must remain an employee of Cheddar for three years. The fair value of each cash settled share based payment at 31 December 2014 was $80 and at 31 December 2015 was $75. At 31 December 2014, it was estimated that four directors would leave before the end of the three years. At 31 December 2015, due to a downturn in the economy, it was estimated that two directors would leave before the end of the three years.
Example 4 - Fair value cash settled. Gouda granted 10,000 cash settled share based payments to each of its 20 directors on 1 January 2015. The rights vest on 31 December 2017. It is anticipated that none of the directors will leave over the three year period. The fair value of each right is as follows:
| Date | Fair value of a right ($) |
|---|---|
| 1 January 2015 | 12.00 |
| 31 December 2015 | 13.50 |
| 31 December 2016 | 13.80 |
| 31 December 2017 | 14.20 |
Both entities have a reporting date of 31 December.
Cheddar: share appreciation rights
Calculate the amounts to be shown in Cheddar's statement of financial position at 31 December 2014 and 31 December 2015 and in its statement of profit or loss for the year ended 31 December 2015.
Gouda: fair value at each reporting date
Calculate Gouda's liability at 31 December 2016 and 31 December 2017 and the expense for the year ended 31 December 2016.
Opening this exercise…