Page 24 - 20. COMPILER QB - INDAS 102

= 14,76,200

Expense recognized in the financial year 2017-2018= (6,34,400 x 9/12) + (14,76,200 x 3/12) = 4,75,800 +
3,69,050 = 8,44,850

4. Expense recognized in the financial year 2018-2019=(14,76,200x9/12)= 11,07,150

Q17. (May 19 – 8 Marks)

st
Beetel Holding Inc. grants 100 shares to each of its 300 employees on 1 January, 2015. The employees
should remain in service during the vesting period. The shares will vest at the end of the

First year if the company's earnings increase by 13%
Second year if the company's earnings increased by more than 21% over the

two - year period
Third year if the entity's earnings increased by more than 23% over the
three-year period.

The fair value per share at the grant date is Rs 125.
In 2015, earnings increased by 9% and 20 employees left the organization. The company expects that

earnings will continue at a similar rate in 2016 and expects that the shares will vest at the end of the year
2016. The company also expects that additional 30 employees will leave the organization in the year 2016

and that 250 employees will receive their shares at the end of the year 2016.
At the end of 2016, the company's earnings increased by 19%. Therefore, the shares did not vest. Only 20

employees left the organization during 2016. Company believes that additional 25 employees will leave in
2017 and earnings will further increase so that the performance target will be achieved in2017.

At the end of the year 2017, only 22 employees left the organization. Assume that the company's earnings
increased to desired level and the performance target has been met.

Determine the expense for each year and pass appropriate journal entries.

SOLUTION

Since the earnings of the entity are non-market related, hence it will not be considered in the fair value

calculation of the shares given. However, the same will be considered while calculating the number of shares
to be vested.
Determination of expenses for each year:

2015 2016 2017
A Total employees 300 300 300

B Cumulative- Employees left (Actual) (20) (40) (62)
C Employees expected to leave in the next year (30) (25) -
D Year end – No of employees 250 235 238

E Shares per employee 100 100 100
F Fair value of a share at grant date 125 125 125

G Vesting period 1/2 2/3 3/3
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