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An entity issued 50 shares each to 170 employees, settled in CASH after 2 years. Grant FV ₹85; Y1 FV ₹80; Y2 FV ₹90. Compute Y1 expense.
ANo expense in Y1
BUse ₹90 (year-end FV)
CUse REPORTING-DATE FV ₹80 (cash-settled SBPs remeasure each period); Y1 = 50 × 170 × 80 × 1/2 = ₹3,40,000
DUse grant-date FV ₹85; Y1 = 50 × 170 × 85 × 1/2
Answer & Solution
Correct answer: C. Use REPORTING-DATE FV ₹80 (cash-settled SBPs remeasure each period); Y1 = 50 × 170 × 80 × 1/2 = ₹3,40,000
Cash-settled SBP uses each reporting period's FV for remeasurement (NOT the grant-date FV). Y1 expense = 50 × 170 × ₹80 × 1/2 = ₹3,40,000.
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