share based payment leigh 6/2007

Hi Mike

in general for Share based payments, you Dr P&L and CR Equity. I dont understand why you would DR equity as the shates should decrease because the company is issuing shares to the directors.?

leigh 6/2007
question b.
on 31/5/2007, leigh purchased PPE for $4m. the supplier agreed to accept payment frr PPE either cash or shares. the supplier can choose 1.5.m shares of the company issued in 6months or to recieve a cash payment in 3months time to the market value of 1.3m shares. it is estimated that the share price will be $3.50 in three months time and $4 in 6 months time.

I dont understand in the solutions how IAS 32 financial instruments -presentation kicks into this question and how the PV is 1.3*$3=$3.9?

do we use the share price on 31.5.2007 or the estimated share price?i am so confused with question.

c. leigh acquired 30% of the ordinary share capital of Handy, a public limited company, on 1/4/2006. The purchase consideration was 1m ordinary shares of leigh which had a market value of $2.50 per share at that date and the fair value of net assets of Handy was $9m . the reatined earnings of handy were $4m and other reserves of handy were $3m at that date. leigh appointed 2 directors to the board of handy and it intends to hold investment for a significant period of time. Leigh exerts significant inflence over handy. the summarised |SOFP of handy at 31.5.2007

share capital $2m
other reserves $3m
Retained earnings $5
Total $10m
There are no new issues of shares by handy since the acquisition by leigh and the estimated recoverable amount of the net assets of handy at 31.5.2007 was $11m

Discuss with computation how the above share based transactions should be accounted for in the F/S for the year ended 31.52007?

i dont understand why the goodwill is negative and how we got the $0.2? again completly confused abt this calculation.

hope you can help.

Thanks very much.