IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

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Wiley IFRS: Practical Implementation Guide and Workbook

December 3 1. 20XS. The expense charged in the in– come statement since the grant date of January I. 20X3 . had been year to December 3 1. 20X3. $2 mil– lion, and year to December 3 1. 20X4. $2.1 million. The expense that would have been charged in the year to December 3 1. 20XS. was $2.2 million. What would be the expense charged in the income statement for the year December 3 1. 20XS? (a) $2.2 million. (b) $8 million. (c) $3.9 million. (d) $2 million. Answer: (c) 12. Elizabeth. a public limited company. has granted 100 share appreciation rights to each of its 1.000 em– ployees in Janu ary 20X4. The management feels that as of December 31, 20X4. 90% of the awards will vest on Decemb er 3 1. 20X6. The fair value of each share appreciation right on December 3 1. 20X4. is $ 10. What is the fair value of the liability to be re– corded in the financial statements for the year ended December 3 1, 20X4? (a) $300.000 (b) $ 10 million (c) $ 100.000 (d) $90.000 Answer: (a) (100 x 1000 x 90% x $10 x 1/3) 13. Jay. a public limited company, has granted 20 share appreciation rights to each of its SODemployees on January I. 20X4. The rights are due to vest on December 31. 20X7, with payment being made on December 3 1. 20X8. Assume that 80% of the awards vest. Share prices are s January I 20X4 IS December 31. 20X4 18 December 31. 20X7 21 December 3 1. 20X8 19 What liability will be recorded on December 31. 20X7. for the share appreciation rights? (a) $ 60.000 (b) $210.000 (c) $ 48.000 (d) $ IS0.000 Answer: (c) [20 x 500 x 80% x ($21 - $15)] 14. How should the settlement of the transaction be accounted for on December 3 1. 20X8? (a) Payment to employees of $32.000. no gain recorded. (b) Payment to employees of $ 16.000. gain of $32.000 is recorded. (c) Payment to employees of $48.000. no gain recorded. (d) Payment to employees of $32.000, gain of $ 16.000 is recorded. Answer: (d) [20 x 500 x 80% x ($19 - $15)] th at is, $32,000 15. Doc. a public limited company. has purchased inventory of $ 100,000. The company has offered the supplier a choice of settlement alternatives. The alter-

Answer: (d) 9. Ashleigh, a public limited company, has granted share options to its employees with a fair value of $6 million. The options vest in three years' time. The Monte-Carlo model was used to value the options, and these estimates had been made: • Grant date (January I . 20X4): estimate of em– ployees leaving the entity during the vesting period-S% • January I, 20XS: revision of estimate of em– ployees leaving to 6% before vesting date • December 3 1, 20X6: actual employees leaving S% A. What would be the expense charged in the income statement in Year to December 3 1. 20X4 ?

(a) $6 million. (b) $2 million.

(a) $1.90 million. (b) $1.88 million. (c) $2 million. (d) $3.78 million. Answe r : (b) ($6 mill ion x 94% x 2/3 - $1.90 million) C. Year to Decembe r 31. 20X6?

(a) $1.90 million. (b) $1.88 million. (c) $2 million. (d) $1.92 million.

Answer : (d) ($6 mill ion x 95% - $3.78 million) 10. Joice. a public limited company. has granted share options to its employees prior to the date from which IFRS 2 became applicable (November 7. 2002). The company decided after the issuance of IFRS 2 to reprice the options. The original exercise price of $20 was repriced at $ IS per option. IFRS 2 would require the company to (a) Apply the Standard to the share options from the original grant date and ignore the repricing. (b) Apply the Standard to the share options from the original grant date. taking into ac– count the repriced award. (c) Apply the Standard to the repriced award only. (d) Ignore the Standard for the whole award of share options. Answer: (c) 11. An entity has granted share options to its em– ployees. The total expense to the vesting date of De– cember 31, 20X6. has been calculated as $8 million. The entity has decided to settle the award early. on

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