Page 28 - 20. COMPILER QB - INDAS 102

(Fair value of the SAR recognized)
31 March 2018
Employee benefits expenses Dr. 2,40,800

To Share based payment liability 2,40,800
(Fair value of the SAR re-measured)
31 March 2019
Employee benefits expenses Dr. 24,100
To Share based payment liability 24,100
(Fair value of the SAR re-measured)
31 March 2020
Share based payment liability Dr. 66,400
To Employee benefits expenses 66,400

(Fair value of the SAR remeasured and reversed)
Share based payment liability Dr. 11,98,500
To Cash/Bank 11,98,500
(Settlement of SAR)

Q20. (January 21 – 12 Marks)

On 1st April 2017, Kara Ltd. granted an award of 150 share options to each of its 1,000 employees, on

condition of continuous employment with Kara Ltd. for three years and the benefits will then be settled in
cash of an equivalent amount of share price. Fair value of each option on the grant date was Rs.129.

Towards the end of 31st March 2018, Kara Ltd.'s share price dropped; so on 1st April 2018 management chose
to reduce the exercise price of the options. At the date of the repricing, the fair value of each of the original

share options granted was Rs. 50 and the fair value of each re-priced option was Rs. 80. Thus, the
incremental fair value of each modified option was Rs. 30.

At the date of the award, management estimated that 10% of employees would leave the entity before the
end of three years (i.e. 900 awards would vest). During the financial year 2018-2019, it became apparent that

fewer employees than expected were leaving, so management revised its estimate of the number of leavers to
only 5 % (i.e. 950 awards would vest). At the end of 31st March 2020, awards to 930 employees actually

vested.
Determine the expense for each year and pass appropriate journal entries as per the relevant IND AS.

SOLUTION

Note: The first para of the question states that “benefits will then be settled in cash of an equivalent

amount of share price.” This implies that the award is cash settled share-based payment. However, the second
and third para talks about repricing of the option which arises in case of equity settled share-based payment.
Hence, two alternative solutions have been provided based on the information taking certain assumptions.

st
1 Alternative based on the assumption that the award is cash settled share-based payment.
In such a situation, the services received against share-based payment plans to be settled in cash are
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