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On January 1, 2018, PAPASA O ASA Co granted 300 share options to each of its 300 employees for the purchase of P40 ordinary share at P50 per share. The employees are required to be employed in the company at least until the option vested. The share options will vest as follows: · End of 2018, if earnings in 2018 increased by 19%. · End of 2019, if average annual earnings during 2018 and 2019 increased by 13%. · End of 2020, if the entity earnings increase by an average of 10% per year over the three year period. The share options have a fair value of P30 per share at the start of 2018. No dividends are expected to be paid over the three year period. 1. Assume that by the end of 2018, the earnings increased to 19% and 30 employees have left. What is the compensation to be recognized in December 31, 2018? 2. Assume that by the end of 2018, the earnings increased to 14% and 30 employees have left and 20 employees will leave in 2019 and 2020. The entity expect that similar earnings will continue to increase at a similar rate in 2019. By the end of 2019, the entity's earnings have increased by only 10% and therefore do not vest at the end of 2019. Further 28 employees have left during the year. The entity expects that a further 25 employees will leave during 2020, and that the entity's earnings will increase by at least 6%, and thereby achieving the average of 10% per year. By the end of 2020, 23 employees have left and the entity's earnings had increased by 8%, resulting in an average increase of 10.679 per year. a. What is the compensation to be recognized in December 31, 2018? b. What is the compensation to be recognized in December 31, 2019? c. What is the compensation to be recognized in December 31, 2020?

On January 1, 2018, PAPASA O ASA Co granted 300 share options to each of its 300 employees for the purchase of P40 ordinary share at P50 per share. The employees are required to be employed in the company at least until the option vested. The share options will vest as follows: · End of 2018, if earnings in 2018 increased by 19%. · End of 2019, if average annual earnings during 2018 and 2019 increased by 13%. · End of 2020, if the entity earnings increase by an average of 10% per year over the three year period. The share options have a fair value of P30 per share at the start of 2018. No dividends are expected to be paid over the three year period. 1. Assume that by the end of 2018, the earnings increased to 19% and 30 employees have left. What is the compensation to be recognized in December 31, 2018? 2. Assume that by the end of 2018, the earnings increased to 14% and 30 employees have left and 20 employees will leave in 2019 and 2020. The entity expect that similar earnings will continue to increase at a similar rate in 2019. By the end of 2019, the entity's earnings have increased by only 10% and therefore do not vest at the end of 2019. Further 28 employees have left during the year. The entity expects that a further 25 employees will leave during 2020, and that the entity's earnings will increase by at least 6%, and thereby achieving the average of 10% per year. By the end of 2020, 23 employees have left and the entity's earnings had increased by 8%, resulting in an average increase of 10.679 per year. a. What is the compensation to be recognized in December 31, 2018? b. What is the compensation to be recognized in December 31, 2019? c. What is the compensation to be recognized in December 31, 2020?

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter15: Contributed Capital
Section: Chapter Questions
Problem 7RE: On January 1, 2019, Phoenix Corporation adopts a performance-based share option plan for 25...
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On January 1, 2018, PAPASA O ASA Co granted 300 share options to each of its 300 employees for the purchase of P40 ordinary share at P50 per share. The employees are required to be employed in the company at least until the option vested. The share options will vest as follows: · End of 2018, if earnings in 2018 increased by 19%. · End of 2019, if average annual earnings during 2018 and 2019 increased by 13%. · End of 2020, if the entity earnings increase by an average of 10% per year over the three year period. The share options have a fair value of P30 per share at the start of 2018. No dividends are expected to be paid over the three year period. 1. Assume that by the end of 2018, the earnings increased to 19% and 30 employees have left. What is the compensation to be recognized in December 31, 2018? 2. Assume that by the end of 2018, the earnings increased to 14% and 30 employees have left and 20 employees will leave in 2019 and 2020. The entity expect that similar earnings will continue to increase at a similar rate in 2019. By the end of 2019, the entity's earnings have increased by only 10% and therefore do not vest at the end of 2019. Further 28 employees have left during the year. The entity expects that a further 25 employees will leave during 2020, and that the entity's earnings will increase by at least 6%, and thereby achieving the average of 10% per year. By the end of 2020, 23 employees have left and the entity's earnings had increased by 8%, resulting in an average increase of 10.67% per year. a. What is the compensation to be recognized in December 31, 2018? b. What is the compensation to be recognized in December 31, 2019? c. What is the compensation to be recognized in December 31, 2020?
Transcribed Image Text:On January 1, 2018, PAPASA O ASA Co granted 300 share options to each of its 300 employees for the purchase of P40 ordinary share at P50 per share. The employees are required to be employed in the company at least until the option vested. The share options will vest as follows: · End of 2018, if earnings in 2018 increased by 19%. · End of 2019, if average annual earnings during 2018 and 2019 increased by 13%. · End of 2020, if the entity earnings increase by an average of 10% per year over the three year period. The share options have a fair value of P30 per share at the start of 2018. No dividends are expected to be paid over the three year period. 1. Assume that by the end of 2018, the earnings increased to 19% and 30 employees have left. What is the compensation to be recognized in December 31, 2018? 2. Assume that by the end of 2018, the earnings increased to 14% and 30 employees have left and 20 employees will leave in 2019 and 2020. The entity expect that similar earnings will continue to increase at a similar rate in 2019. By the end of 2019, the entity's earnings have increased by only 10% and therefore do not vest at the end of 2019. Further 28 employees have left during the year. The entity expects that a further 25 employees will leave during 2020, and that the entity's earnings will increase by at least 6%, and thereby achieving the average of 10% per year. By the end of 2020, 23 employees have left and the entity's earnings had increased by 8%, resulting in an average increase of 10.67% per year. a. What is the compensation to be recognized in December 31, 2018? b. What is the compensation to be recognized in December 31, 2019? c. What is the compensation to be recognized in December 31, 2020?
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