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Part of BPP kit ques 14:
“Luploid Co issued 100 options to each of Hammond Co’s 10,000 employees on 1 July 20X7. The shares are conditional on the employees completing a further two years of service. Additionally, the scheme required that the market price of Luploid Co’s shares had to increase by 10% from its value of $30 per share at the acquisition date over the vesting period. It was anticipated at 1 July 20X7 that 10% of staff would leave over the vesting period but this was revised to 4% by 30 June 20X8. The fair value of each option at the grant date was $20. The share price of Luploid Co at 30 June 20X8 was $32 and is anticipated to grow at a similar rate in the year ended 30 June 20X9.
How much of an expense for the share-based payment scheme should be recognised in the consolidated profit or loss of Luploid Co for the year ended 30 June 20X8.
Your answer should include a brief discussion of how the vesting conditions impact upon the calculations.”the solution is finding the FV at grant date (18m). However, the ques is asking for year ended 20X8. Shouldn’t the FV be 1.5 m (10x9600x20x4/5)?
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