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An entity issues SOPs requiring 3 years' service + share price to reach ₹100. Identify EACH condition's nature and accounting treatment.
AService: in FV; Share price: in number of vested instruments
BBoth in FV with true-up
CService: in NUMBER of vested instruments (true-up); Share-price target: MARKET condition included in grant-date FV (no true-up)
DBoth in number with true-up
Answer & Solution
Correct answer: C. Service: in NUMBER of vested instruments (true-up); Share-price target: MARKET condition included in grant-date FV (no true-up)
Service (a vesting condition, not market) adjusts the NUMBER expected to vest with true-up to actual. Share-price target is a MARKET condition embedded in grant-date FV via option pricing — no true-up.
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