alleryStart learning →Rs 200,000 was booked over 2 years, then a non-market profit target fails. Net cumulative expense ends at
ARs 0 (nil)
BRs 100,000
CRs 200,000
DRs 400,000
Answer & Solution
Correct answer: A. Rs 0 (nil)
Failure of a non-market vesting condition means no instruments vest, so the amounts booked are reversed to a nil cumulative expense.
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2,000 SARs vest immediately with fair value Rs 35 each. Liability recognised at once is10 staff get 1,000 options each, FV Rs 25 with a 5-year share price target. Annual charge Total expected cost of a 4-year equity-settled plan is Rs 480,000 with no forfeitures. YeaSame SARs, year 2: 48 staff vest, fair value Rs 18, liability so far Rs 175,000. Year 2 ex50 staff hold 500 SARs each, 2-year vesting. SAR fair value is Rs 14 at end of year 1. YeaRepricing lifts fair value of 1,000 options from Rs 8 to Rs 11. Incremental fair value is1,000 vested options bought back at Rs 80 each when fair value is Rs 70. Expense recogniseA 3-year plan worth Rs 900,000 is cancelled after year 1 (Rs 300,000 booked). Expense on c