On January, 2018 Leni Corp. grants each of its 200 employees in the production department share options. The share options will vest at the end of 2021, provided that the employees remain in the entity's employ and provided that the production increase by at least 50% by 2021. Actual production in 2018 (base year) is 120,000 units. If the production volume increase by an average of 50%-75% by 2021, each employee will receive 20 options each. If production volume inctease by 76% to 100% by 2021, each employee will receive 40 options each. If production volume increase by more than 100% by 2021, each employee will receive 50 options each. Four options plus P120 shall entitle the holder to acquire one ordinary shares (P100 par) at any time up to December 31, 2023. On the grant date, the company estimates that the share options have a fair value of P12 per option. There has been a 20% average increase in annual production for the past three years and that the company expects the same pattern during the vesting period. The following information are deemed relevant for your analysis: Actual employees Estimated additional employees who leaving the company will leave by the end 2021 Actual Year production 2018 20 120,000 2019 8 15 130,000 2020 11 140,000 2021 15 210.000 Requirements: 1. What is the compensation expense in 2019? 2. What is the carrying value of the ordinary share options outstanding as of December 31, 2020? 3. What is the compensation expense in 2021?
On January, 2018 Leni Corp. grants each of its 200 employees in the production department share options. The share options will vest at the end of 2021, provided that the employees remain in the entity's employ and provided that the production increase by at least 50% by 2021. Actual production in 2018 (base year) is 120,000 units. If the production volume increase by an average of 50%-75% by 2021, each employee will receive 20 options each. If production volume inctease by 76% to 100% by 2021, each employee will receive 40 options each. If production volume increase by more than 100% by 2021, each employee will receive 50 options each. Four options plus P120 shall entitle the holder to acquire one ordinary shares (P100 par) at any time up to December 31, 2023. On the grant date, the company estimates that the share options have a fair value of P12 per option. There has been a 20% average increase in annual production for the past three years and that the company expects the same pattern during the vesting period. The following information are deemed relevant for your analysis: Actual employees Estimated additional employees who leaving the company will leave by the end 2021 Actual Year production 2018 20 120,000 2019 8 15 130,000 2020 11 140,000 2021 15 210.000 Requirements: 1. What is the compensation expense in 2019? 2. What is the carrying value of the ordinary share options outstanding as of December 31, 2020? 3. What is the compensation expense in 2021?
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 8RE: On January 2, 2019, Brust Corporation grants its new CFO 2,000 restricted share units. Each of the...
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Transcribed Image Text:On January, 2018 Leni Corp. grants each of its 200 employees in the production department share options. The share options will vest at the end of 2021, provided that the
employees remain in the entity's employ and provided that the production increase by at least 50% by 2021. Actual production in 2018 (base year) is 120,000 units. If the production
volume increase by an average of 50%-75% by 2021, each employee will receive 20 options each. If production volume inctease by 76% to 100% by 2021, each employee will receive
40 options each. If production volume increase by more than 100% by 2021, each employee will receive 50 options each. Four options plus P120 shall entitle the holder to acquire one
ordinary shares (P100 par) at any time up to December 31, 2023.
On the grant date, the company estimates that the share options have a fair value of P12 per option. There has been a 20% average increase in annual production for the past three
years and that the company expects the same pattern during the vesting period.
The following information are deemed relevant for your analysis:
Estimated additional employees who
Actual employees
leaving the company
will leave by the end 2021
Actual
Year
production
2018
20
120,000
2019
8.
15
130,000
2020
6.
11
140,000
2021
15
210.000
Requirements:
1. What is the compensation expense in 2019?
2. What is the carrying value of the ordinary share options outstanding as of December 31, 2020?
3. What is the compensation expense in 2021?
5.
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