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Continuing Ankita example: at end of 20X2, earnings grew 18% (not 20%), so target shifts to Y3. Actual leavers in Y2 = 29. Entity expects 23 more to leave in Y3. Compute Y2 expense.
A₹26,84,000 (same as Y1)
BReverse all Y1 expense to zero
C₹7,23,867 (= 419 × 100 × 122 × 2/3 − ₹26,84,000)
D₹34,07,867 cumulative
Answer & Solution
Correct answer: C. ₹7,23,867 (= 419 × 100 × 122 × 2/3 − ₹26,84,000)
Number of vested employees revised: 500 − 58 actual leavers − 23 expected leavers = 419. Vesting period revised to 3 years → proportionate 2/3. Cumulative expense = 419 × 100 × 122 × 2/3 = ₹34,07,867. Y2 incremental = 34,07,867 − 26,84,000 = ₹7,23,867.
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