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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?
Do 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.
Sir,
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
Which 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
I 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?
The 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.
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