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Entity P issues SBP; market condition expected in 4 years; actually fulfilled in Y5 (a year late). Identify expense pattern.
AY1-Y5 ₹500 each year
BY5 ₹2,500 only
CY1-Y4 ₹0, Y5 ₹2,500
DY1 ₹625, Y2 ₹625, Y3 ₹625, Y4 ₹625, Y5 ₹0 (no extension of vesting; original expected period stands)
Answer & Solution
Correct answer: D. Y1 ₹625, Y2 ₹625, Y3 ₹625, Y4 ₹625, Y5 ₹0 (no extension of vesting; original expected period stands)
Market condition fulfilled LATER than expected does NOT extend the recognition period. Grant-date FV (with market condition modelled in) is recognised over the originally expected vesting period of 4 years — fully recognised by Y4. Y5 has no further expense.
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