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IN THIS THIRD LECTURE , you mentioned in the end that you reverse out all of the entries that you have previously processed if market based vesting conditions have not been met , ONLY if you are at the vesting date
the entries for the end of the first year is 31 dec 2015
dr 100000
cr 1000002nd year is 31 dec 2016
dr 100000
cr 2000003rd year is 31 dec 2017 which is the vesting period
QUESTION 1) if market based vesting conditions($15) have been met ,would the following journal entries be correct …..?
dr 100000
cr 300000QUESTION 2) and what if the share price doesnt reach $15 ….
what would the journal entries be for dec 2017 ?
QUESTION 3) how do you reverse out the previous entries if $15 condition has not been met? what would happen to the entries made for dec 15 and dec 16 ?
please answer each question separately ,thank you:)
Hi,
Your double entries do not balance in either year 2 or year 3. Presumably the DR and CR should be 100,000 each.
So if the vesting conditions are met then you would process the same entry as the previous two years.
If you do not meet the vesting conditions then you would remove the credit that has been built up over the first two years by debiting it and then the credit entry would be taken through profit or loss/retained earnings.
Thanks
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