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Hi sir, I would like to ask about the vesting conditions for market based vs non-market based.
1. For market based, we can just ignore until the shares actually vested. << What does it means?
2. If we x met the vesting condition, what shall we do for market based vs non-market based?
I am blurred
3. Vesting condition is apply to both cash settled and equity settled share based pymt??
4. What if the parent issue cash settled share option to purchase a subsidiary, will this amount form part of purchase consideration? if yes, we should use the entire liability amt for the entire vesting period or how?
Thanks
1. Ignore information in the question that relates to share price conditions. Share price volatility is built into the calculation of the FV of the instrument.
2. Adjust for non-market only.
3. Yes.
4. I think so, yes. You can refer to 2019 ACCA exams for a similar example. But don’t get too bogged down into the detail.
(One question per thread please!)
Refer to queries 1,
is that means if the vesting condition is market based, no matter we fulfill or not, we will just ignore and calculate the share based expense using FV at grant date over the vesting period based on number of employees that expect to leave?
Refer to queries 2,
for non-market based, if the vesting condition does not met, we have to reverse the entries that we made during the vesting period :
Dr Equity (OCE) Cr Share based expense (SOPL)
New queries:
Does this market based vs non-market based also applies to cash settled share based pymt question?
Thank you sir
1. You are correct.
2. You are correct.
3. There is some inconsistency in practice, but my working rule is that it applies to both types of plan.
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