Homework Answers
As per IFRS :-
Fair Value of stock options (1000 * $30) = $30000
Vesting Period = 3 years
Compensation expenses recognized each year :-
= $30000/3 year
= $10000 per year
As per U.S.GAAP :-
Fair Value of stock options (1000 * $30) = $30000
Vesting Period = 3 years
Compensation expenses recognized year 1 :-
= $30000/3 year
= $10000
on Jan 1, year 2, fair value of the option is = $28 per option
Total option fair value = 1000 * $28 = $28000
Balance Amount which is not recognized on Jan 1, year 2 :-
= Total option fair value - Compensation expenses recognized on year 1
= $28000 - $10000
= $18000
Balance amount recognized on straight line basis ;-
For year 2 = $18000 / 2 = $9000
For year 3 = $18000 / 2 = $9000
Journal Entries :-
in IFRS ;-
| Year | Particulars | Debit($) | Credit($) |
| 1 | Compensation Expenses | 10000 | |
| Additional Paid in Capital | 10000 | ||
| 2 | Compensation Expenses | 10000 | |
| Additional Paid in Capital | 10000 | ||
| 3 | Compensation Expenses | 10000 | |
| Additional Paid in Capital | 10000 |
in U.S.GAAP :-
| Year | Particulars | Debit($) | Credit($) |
| 1 | Compensation Expenses | 10000 | |
| Additional Paid in Capital | 10000 | ||
| 2 | Compensation Expenses | 9000 | |
| Additional Paid in Capital | 9000 | ||
| 3 | Compensation Expenses | 9000 | |
| Additional Paid in Capital | 9000 |
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