Page 7 - 20. COMPILER QB - INDAS 102

Position on 1st Year Position on 2nd Year Position on 3rd Year
- No. of employees left - Employees left = 35 - Employees left = 28
= 40
- Estimate of employees to - Estimate of employees - Employees exercising
leave in Year 2 = 36 to leave in Year 3 = 30 Options in Group III = 295

- Estimate of employees to - Employees exercising
leave in Year 3 = 34 Options in Group II =
319
- Employees exercising
Options in Group I
= 350
Options not exercised immediately on vesting, were forfeited. Compute expenses to recognise in each year and
show important accounts in the books of the company.
Solution

Total number of Options per employee = 60

Group I - 20% vesting in Year Group II - 40% vesting in Year Group III - 40% vesting in Yr. 3
1 2
= 12 options, = 24 options, = 24 options,
Vesting period = 1 Yr. Vesting period = 2 Yrs. Vesting period = 3 Yrs.
Computation of Expenses for all the years

Group = No. of Options Group I = 12 Group II = 24 Options Group III = 24 Options
Options
Year 1 Year 1 Year 2 Year 1 Year 2 Year 3

(a) Employees at year end 400 - 40 = 400 - 40 = 360 - 35 = 400 - 40 = 360 - 35 = 325 - 28 =
= [Opening
No. of Employees - 360 360 325 360 325 297
Forfeiture]
(b) Expected to leave in NA 36 NA 36 + 34 = 30 NA
future 70
(c) No. of 360 324 325 290 295 297
employees eligible (a - b)

(d) Options (360 x 12 sh.) (324 x 24 (325 x 24 (290 x 24 (295 x 24 (297 x 24
expected to Vest = sh.) sh.) sh.) sh.) sh.)
[(c) x No. of Shares] 4,320 7,776 7,800 6,960 7,080 7,128
(e) FV per option = Rs. 10 Rs. 12.50 Rs. 12.50 Rs. 14 Rs. 14 Rs. 14
(f) Value of Total Options Rs. 43,200 Rs. 97,200 Rs. 97,500 Rs. 97,440 Rs. 99,120 Rs. 99,792
= [d x e]
(g) Total [(f) x 1/2] [(f) x 2/2] [(f) x 1/3] [(f) x 2/3] [(f) x 3/3]
Cumulative Cost of Options
= [(f) x Completed Yrs/ Rs. 48,600 Rs. 97,500 Rs.32,480 Rs.66,080 Rs. 99,792
Total Yrs) Rs. 43,200
(h) Less: 0 0 Rs. 48,600 0 Rs.32,480 Rs. 66,080
Recognized in last years

20. 6