• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>

Has Kaplan got this Share-based payment answer wrong?

Forums › ACCA Forums › ACCA SBR Strategic Business Reporting Forums › Has Kaplan got this Share-based payment answer wrong?

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by avbosip.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 6, 2021 at 12:22 pm #623420
    nighteyes
    • Topics: 3
    • Replies: 28
    • ☆

    Edit: I’m an idiot! They have SIX directors, not five (I even typed six in my original post!). I’m leaving the rest of this here for others as a cautionary note to …

    READ THE QUESTION THOROUGHLY!!

    I’m revising for the SBR exam I’m sitting this Thursday, and am on Question 24 of Kaplan’s Exam Kit: Garden. The question involves the following:

    On 1 December 20X5, a share-based payment scheme was introduced for Garden’s six directors. The directors are entitled to 600,000 share options each if they remain employed by the company until 30 November 20X8. The fair value of each share option at the grant date was $4, and $5 at 30 November 20X6 (year end). At 1 December 20X5 it was estimated that none of the directors would leave before the end of the three years but, as at 30 November 20X6, the estimated number was revised to one.

    The question asks for the correct accounting treatment of the above at 30 November 20X6, and Kaplan’s answer is as follows:

    5 directors x 600,000 options x $4 x 1/3 = $4 million

    Isn’t that wrong? Shouldn’t the calculation take into account the expectation of one director leaving? My answer would be:

    4 directors x 600,000 options x $4 x 1/3 = $3.2 million.

    June 6, 2021 at 3:45 pm #623458
    avbosip
    Moderator
    • Topics: 0
    • Replies: 106
    • ☆☆

    Hello there.

    I have just reviewed the question and I think that it should be:

    5 directors x 600,000 options x $4 x 1/3 = $4 million

    The question asks: the accounting treatment as on 30 Nov 20X6. The only revised information became avaliable on 30 Nov 20X6 and not during the year, hence there are still 5 directors as on 30 Nov 20X6.

    This is my opinion and may be wrong, but I believe it is correct.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • jingdong on Pensions (IAS 19) – Introduction – ACCA (SBR) lectures
  • jingdong on Pensions (IAS 19) – Example – ACCA (SBR) lectures
  • Joanne94 on The Management Accountant’s Profit Statement – Marginal Costing – ACCA Management Accounting (MA)
  • mannannagpal on Sources of data – ACCA Management Accounting (MA)
  • mannannagpal on Sources of data – ACCA Management Accounting (MA)

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy