Page 10 - 20. COMPILER QB - INDAS 102

MTPs QUESTIONS

Q7. (Aug. 18 – 10 Marks)

On 1 January 2017, Ambani Limited granted its CEO an option to take either cash amount equivalent to 800
shares or 990 shares. The minimum service requirement is 2 years. There is a condition to keep the shares for
3 years if shares are opted.

Fair values of the shares INR
Share alternative fair value (with restrictions) 212

Grant date fair value on 1st January, 2016 213
Fair value on 31st December, 2016 220
Fair value on 31st December, 2017 232

The key management exercises his cash option at the end of 2018. Pass journal entries.

SOLUTION

1st Jan., 2017 31st Dec., 2017 31st Dec., 2018
Equity alternative (990 x 212) 2,09,880
Cash alternative (800 x 213) 1,70,400

Equity option (2,09,880 – 1,70,400) 39,480
Cash Option (cumulative) (using period end fair value) 88,000 1,85,600
Equity Option (cumulative) 19,740 39,480

Expense for the period
Equity option 19,740 19,740
Cash Option 88,000 97,600

Total 1,07,740 1,17,340

31st Dec., 2016

Employee benefits expenses Dr. 1,07,740
To Share based payment reserve (equity) 19,740

To Share based payment liability 88,000
(Recognition of Equity option and cash settlement option)

31st Dec., 2017
Employee benefits expenses Dr. 1,17,340
To Share based payment reserve (equity) 19,740

To Share based payment liability 97,600
(Recognition of Equity option and cash settlement option)

Share based payment liability Dr. 1,85,600
To Bank/ Cash 1,85,600
(Settlement in cash)

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