Share-Based Payments (IFRS 2)

CR – May 2016 – L3 – Q7b – Share-Based Payment (IFRS 2)

Explain how KOKORO JOBIJOBI should account for employee share options granted to its subsidiaries in its own, subsidiary, and group financial statements.

Question

b) KOKORO JOBIJOBI Group wishes to expand its operations. As part of this expansion, it has granted options to employees of its subsidiaries GBANJA and GORO over its own shares as at March 31, 2015. The awards vest immediately. KOKORO JOBIJOBI is not proposing to make a charge to the subsidiary for these options.

KOKORO JOBIJOBI does not know how to account for this transaction in its own, the subsidiaries, and the group financial statements.

Required:
Explain to KOKORO JOBIJOBI how the above transactions should be dealt with in its own, the subsidiaries, and the group financial statements.

Answer

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Tags: Employee Compensation, Group Financial Statements, IFRS 2, Share Options, Subsidiaries
Level: Level 3

Topic: Share-Based Payments (IFRS 2)

CR – May 2016 – L3 – Q4c – Share-Based Payments (IFRS 2)

Discuss how the SARs granted by Yerokun Ltd should be accounted for under IFRS 2 and IFRS 13 from the grant date to April 30, 2014.

Question

On May 1, 2011, Yerokun Limited granted 500 share appreciation rights (SARs) to its 300 managers. All of the rights vested on April 30, 2013, but they can be exercised from May 1, 2013, to April 30, 2015. At the grant date, the value of each SAR was ₦10 and it was estimated that 5% of the managers would leave during the vesting period. The fair value of the SARs is as follows:

Date	Fair Value of SAR
April 30, 2012	₦9
April 30, 2013	₦11
April 30, 2014	₦12

All of the managers who were expected to leave employment did not leave the company as expected before April 30, 2013. On April 30, 2015, 60 managers exercised their options when the intrinsic value of the right was ₦10.50 and were paid.

Yerokun Limited is confused as to whether to account for SARs under IFRS 2 Share-Based Payment or IFRS 13 Fair Value Measurement and would like to be advised as to how the SARs should have been accounted for from the grant date to April 30, 2014.

Answer

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Tags: Fair Value, IFRS 13, IFRS 2, SARs, Share Appreciation Rights, Vesting Period
Level: Level 3

Topic: Share-Based Payments (IFRS 2)

CR – May 2023 – L3 – Q6a – Share-Based Payments (IFRS 2)

Evaluate the deferred tax implications of share options for May 31, 2020, and 2021.

Question

Omoge Nigeria PLC has the following share options scheme for its directors as of May 31, 2021:

The price of the company’s shares as of:

May 31, 2021: ₦8 per share
May 31, 2020: ₦8.50 per share

Key details:

Directors must be working for Omoge Nigeria PLC on the vesting dates for the options to vest.
No directors have left the company since the share options were issued, and none are expected to leave before June 2023.
The options can be exercised on the first day of the month in which they vest.
In accordance with IFRS 2, an expense of ₦600,000 was charged to profit in the year ended May 31, 2020, and the cumulative expense for the two years ended May 31, 2021, is ₦2,200,000.
Tax allowances arise when the options are exercised and are based on the option’s intrinsic value at the exercise date.
Assume a tax rate of 30%.

Required:

Evaluate the deferred tax implications of the share options for the year ended May 31, 2020, and May 31, 2021. (10 Marks)

Answer

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Tags: Deferred Tax, IAS 12, IFRS 2, Share Options, Tax Allowances
Level: Level 3

Topic: Share-Based Payments (IFRS 2)

CR – Nov 2020 – L3 – Q6 – Share-Based Payments (IFRS 2)

Discuss the classification of share-based payments and the accounting treatment of share options granted to employees.

Question

a. KutuKutu plc has a policy in place to pay its employees a performance bonus. This bonus is to be paid in cash and is unrelated to the movement in its share price. KutuKutu plc has the choice of settling the bonus in cash or in equity shares to the value of the cash bonus. Based on bonuses paid in prior years, KutuKutu has always settled the bonuses to employees that qualify in shares.

b. KutuKutu plc grants one share option to each of its 50 employees on January 1, 2016. The share options will vest at the end of the 2 years provided that: (i) The employees remain in KutuKutu plc‘s employment at that date; and (ii) The earnings before interest, tax, depreciation and amortisation (EBITDA) of KutuKutu plc for the 2nd year achieves a specified target.

At the grant date, each recipient is required to make a non-refundable cash payment of N2,000 to KutuKutu plc. This payment amount is based on the estimated fair value (FV) of the share option, which reflects the probability that the target EBITDA will be achieved in the 2nd year. The FV of each option would be N250 (excluding the effect of the EBITDA condition). If KutuKutu plc does not achieve the target EBITDA or if an employee leaves the employment of KutuKutu plc, no shares will be issued, and the employee will not be entitled to a repayment. Accordingly, both service and non-market vesting conditions are deemed to be substantive.

Required: i. Do the transactions entered into under (a) above meet the definition of equity-settled share-based payment transactions within the scope of IFRS 2? (8 Marks)

ii. How should the transaction in (b) above be accounted for? (12 Marks)

Answer

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Tags: Accounting Treatment, Equity-Settled Payments, IFRS 2, Share Options
Level: Level 3

Topic: Share-Based Payments (IFRS 2)

CR – Nov 2018 – L3 – SB – Q2 – Share-Based Payments (IFRS 2)

Examination of KutuKutu Plc.'s share-based payment policies and transactions under IFRS 2

Question

(1) KutuKutu Plc. has a policy in place to pay its employees a performance bonus. This bonus is to be paid in cash and is unrelated to the movement in its share price. KutuKutu Plc. has the choice of settling the bonus in cash or in equity shares to the value of the cash bonus. Based on bonuses paid in prior years, KutuKutu Plc. has always settled the bonuses of qualified employees in shares.

(2) KutuKutu Plc. grants one share option to each of its 50 employees on January 1, 2016. The share options will vest at the end of 2 years provided that:

The employees remain in KutuKutu Plc.’s employment at that date; and
The Earnings before Interest, Tax, Depreciation, and Amortisation (EBITDA) of KutuKutu Plc. for the second year achieves a specified target.

At the grant date, each recipient is required to make a non-refundable cash payment of N2,000 to KutuKutu Plc. This payment is based on the estimated fair value (FV) of the share option which reflects the probability that the target EBITDA will be achieved in the second year. FV of each option would be N250 (excluding the effect of the EBITDA condition).

If KutuKutu Plc. does not achieve the target EBITDA or if an employee leaves the employment of KutuKutu Plc., no shares will be issued, and the employee will not be entitled to a repayment. Accordingly, both service and non-market vesting conditions are deemed to be substantive.

Required:

a. Do the transactions entered into in (1) above meet the definition of equity-settled share-based payment transactions within the scope of IFRS 2? (8 Marks)

b. How should the transaction in (2) above be accounted for? (12 Marks)

Answer

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Tags: Cash-Settled Transactions, Employee Benefits, Equity-Settled Transactions, Financial Reporting, IFRS 2, Share-Based Payments
Level: Level 3

Topic: Share-Based Payments (IFRS 2)

CR – May 2016 – L3 – Q7b – Share-Based Payment (IFRS 2)

Explain how KOKORO JOBIJOBI should account for employee share options granted to its subsidiaries in its own, subsidiary, and group financial statements.

Question

KOKORO JOBIJOBI does not know how to account for this transaction in its own, the subsidiaries, and the group financial statements.

Required:
Explain to KOKORO JOBIJOBI how the above transactions should be dealt with in its own, the subsidiaries, and the group financial statements.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Employee Compensation, Group Financial Statements, IFRS 2, Share Options, Subsidiaries
Level: Level 3

Topic: Share-Based Payments (IFRS 2)

CR – May 2016 – L3 – Q4c – Share-Based Payments (IFRS 2)

Discuss how the SARs granted by Yerokun Ltd should be accounted for under IFRS 2 and IFRS 13 from the grant date to April 30, 2014.

Question

Date	Fair Value of SAR
April 30, 2012	₦9
April 30, 2013	₦11
April 30, 2014	₦12

Answer

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Tags: Fair Value, IFRS 13, IFRS 2, SARs, Share Appreciation Rights, Vesting Period
Level: Level 3

Topic: Share-Based Payments (IFRS 2)

CR – May 2023 – L3 – Q6a – Share-Based Payments (IFRS 2)

Evaluate the deferred tax implications of share options for May 31, 2020, and 2021.

Question

Omoge Nigeria PLC has the following share options scheme for its directors as of May 31, 2021:

The price of the company’s shares as of:

May 31, 2021: ₦8 per share
May 31, 2020: ₦8.50 per share

Key details:

Directors must be working for Omoge Nigeria PLC on the vesting dates for the options to vest.
No directors have left the company since the share options were issued, and none are expected to leave before June 2023.
The options can be exercised on the first day of the month in which they vest.
In accordance with IFRS 2, an expense of ₦600,000 was charged to profit in the year ended May 31, 2020, and the cumulative expense for the two years ended May 31, 2021, is ₦2,200,000.
Tax allowances arise when the options are exercised and are based on the option’s intrinsic value at the exercise date.
Assume a tax rate of 30%.

Required:

Evaluate the deferred tax implications of the share options for the year ended May 31, 2020, and May 31, 2021. (10 Marks)

Answer

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Tags: Deferred Tax, IAS 12, IFRS 2, Share Options, Tax Allowances
Level: Level 3

Topic: Share-Based Payments (IFRS 2)

CR – Nov 2020 – L3 – Q6 – Share-Based Payments (IFRS 2)

Discuss the classification of share-based payments and the accounting treatment of share options granted to employees.

Question

Required: i. Do the transactions entered into under (a) above meet the definition of equity-settled share-based payment transactions within the scope of IFRS 2? (8 Marks)

ii. How should the transaction in (b) above be accounted for? (12 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Treatment, Equity-Settled Payments, IFRS 2, Share Options
Level: Level 3

Topic: Share-Based Payments (IFRS 2)

CR – Nov 2018 – L3 – SB – Q2 – Share-Based Payments (IFRS 2)

Examination of KutuKutu Plc.'s share-based payment policies and transactions under IFRS 2

Question

(2) KutuKutu Plc. grants one share option to each of its 50 employees on January 1, 2016. The share options will vest at the end of 2 years provided that:

The employees remain in KutuKutu Plc.’s employment at that date; and
The Earnings before Interest, Tax, Depreciation, and Amortisation (EBITDA) of KutuKutu Plc. for the second year achieves a specified target.

Required:

a. Do the transactions entered into in (1) above meet the definition of equity-settled share-based payment transactions within the scope of IFRS 2? (8 Marks)

b. How should the transaction in (2) above be accounted for? (12 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cash-Settled Transactions, Employee Benefits, Equity-Settled Transactions, Financial Reporting, IFRS 2, Share-Based Payments
Level: Level 3

Topic: Share-Based Payments (IFRS 2)

Topic: Share-Based Payments (IFRS 2)

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CR – May 2016 – L3 – Q7b – Share-Based Payment (IFRS 2)

Explain how KOKORO JOBIJOBI should account for employee share options granted to its subsidiaries in its own, subsidiary, and group financial statements.

CR – May 2016 – L3 – Q4c – Share-Based Payments (IFRS 2)

Discuss how the SARs granted by Yerokun Ltd should be accounted for under IFRS 2 and IFRS 13 from the grant date to April 30, 2014.

CR – May 2023 – L3 – Q6a – Share-Based Payments (IFRS 2)

Evaluate the deferred tax implications of share options for May 31, 2020, and 2021.

CR – Nov 2020 – L3 – Q6 – Share-Based Payments (IFRS 2)

Discuss the classification of share-based payments and the accounting treatment of share options granted to employees.

CR – Nov 2018 – L3 – SB – Q2 – Share-Based Payments (IFRS 2)

Examination of KutuKutu Plc.'s share-based payment policies and transactions under IFRS 2

CR – May 2016 – L3 – Q7b – Share-Based Payment (IFRS 2)

Explain how KOKORO JOBIJOBI should account for employee share options granted to its subsidiaries in its own, subsidiary, and group financial statements.

CR – May 2016 – L3 – Q4c – Share-Based Payments (IFRS 2)

Discuss how the SARs granted by Yerokun Ltd should be accounted for under IFRS 2 and IFRS 13 from the grant date to April 30, 2014.

CR – May 2023 – L3 – Q6a – Share-Based Payments (IFRS 2)

Evaluate the deferred tax implications of share options for May 31, 2020, and 2021.

CR – Nov 2020 – L3 – Q6 – Share-Based Payments (IFRS 2)

Discuss the classification of share-based payments and the accounting treatment of share options granted to employees.

CR – Nov 2018 – L3 – SB – Q2 – Share-Based Payments (IFRS 2)

Examination of KutuKutu Plc.'s share-based payment policies and transactions under IFRS 2

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CR – May 2016 – L3 – Q7b – Share-Based Payment (IFRS 2)

Explain how KOKORO JOBIJOBI should account for employee share options granted to its subsidiaries in its own, subsidiary, and group financial statements.

You're reporting an error for "CR – May 2016 – L3 – Q7b – Share-Based Payment (IFRS 2)"

CR – May 2016 – L3 – Q4c – Share-Based Payments (IFRS 2)

Discuss how the SARs granted by Yerokun Ltd should be accounted for under IFRS 2 and IFRS 13 from the grant date to April 30, 2014.

You're reporting an error for "CR – May 2016 – L3 – Q4c – Share-Based Payments (IFRS 2)"

CR – May 2023 – L3 – Q6a – Share-Based Payments (IFRS 2)

Evaluate the deferred tax implications of share options for May 31, 2020, and 2021.

You're reporting an error for "CR – May 2023 – L3 – Q6a – Share-Based Payments (IFRS 2)"

CR – Nov 2020 – L3 – Q6 – Share-Based Payments (IFRS 2)

Discuss the classification of share-based payments and the accounting treatment of share options granted to employees.

You're reporting an error for "CR – Nov 2020 – L3 – Q6 – Share-Based Payments (IFRS 2)"

CR – Nov 2018 – L3 – SB – Q2 – Share-Based Payments (IFRS 2)

Examination of KutuKutu Plc.'s share-based payment policies and transactions under IFRS 2

You're reporting an error for "CR – Nov 2018 – L3 – SB – Q2 – Share-Based Payments (IFRS 2)"

CR – May 2016 – L3 – Q7b – Share-Based Payment (IFRS 2)

Explain how KOKORO JOBIJOBI should account for employee share options granted to its subsidiaries in its own, subsidiary, and group financial statements.

You're reporting an error for "CR – May 2016 – L3 – Q7b – Share-Based Payment (IFRS 2)"

CR – May 2016 – L3 – Q4c – Share-Based Payments (IFRS 2)

Discuss how the SARs granted by Yerokun Ltd should be accounted for under IFRS 2 and IFRS 13 from the grant date to April 30, 2014.

You're reporting an error for "CR – May 2016 – L3 – Q4c – Share-Based Payments (IFRS 2)"

CR – May 2023 – L3 – Q6a – Share-Based Payments (IFRS 2)

Evaluate the deferred tax implications of share options for May 31, 2020, and 2021.

You're reporting an error for "CR – May 2023 – L3 – Q6a – Share-Based Payments (IFRS 2)"

CR – Nov 2020 – L3 – Q6 – Share-Based Payments (IFRS 2)

Discuss the classification of share-based payments and the accounting treatment of share options granted to employees.

You're reporting an error for "CR – Nov 2020 – L3 – Q6 – Share-Based Payments (IFRS 2)"

CR – Nov 2018 – L3 – SB – Q2 – Share-Based Payments (IFRS 2)

Examination of KutuKutu Plc.'s share-based payment policies and transactions under IFRS 2

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