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ACCA Strategic Professional · Strategic Business Reporting (International) · Share-based payment

On 1 January 20X1, Delta Co grants 100 share options to each of its 200 employees, vesting on 31 December 20X3 if the employee remains in service. The fair value of each option at grant date is $12. At 31 December 20X1, Delta estimates that 10% of employees will leave before vesting. Under IFRS 2, what expense is recognised for the year ended 31 December 20X1?

The expense is $72,000. Expected vesting options are 18,000 at a grant-date fair value of $12, giving $216,000, recognised evenly over three years, so one third falls in year one. Leavers must be estimated and the cost must be spread over the vesting period.

  1. A$72,000Correct
  2. B$216,000
  3. C$240,000
  4. D$80,000

Explanation

Total options expected to vest = 200 x 90% x 100 = 18,000. At $12 each, total cost is $216,000. One third is recognised in year 1 over the 3-year vesting period: $72,000. $80,000 wrongly ignores expected leavers; $216,000 fails to spread over the vesting period.

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