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An entity grants 10,000 share options requiring 3 years' service + 10% cumulative cost reduction. Year 1: 12% achieved; Year 2: 8% achieved (target now NOT expected to vest); Year 3: 10% achieved. Identify expense recognition.
ANo expense any year
BLinear ₹3,16,667 each year
CFull ₹9,50,000 in Year 1 only
DYear 1: ₹3,16,667 (= 10,000 × 95 × 1/3); Year 2: REVERSE the Y1 expense (₹3,16,667); Year 3: recognise full ₹9,50,000 (10,000 × 95 × 3/3)
Answer & Solution
Correct answer: D. Year 1: ₹3,16,667 (= 10,000 × 95 × 1/3); Year 2: REVERSE the Y1 expense (₹3,16,667); Year 3: recognise full ₹9,50,000 (10,000 × 95 × 3/3)
Non-market performance condition. Year 1: target on track; recognise 1/3. Year 2: target not expected → reverse cumulative to zero. Year 3: target achieved → recognise full cumulative. The expense profile follows expectation revisions.
Related questions
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