CE on Share-Based Payment - CLASSROOM EXERCISES ON...

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CLASSROOM EXERCISES ON SHARE-BASED PAYMENT Prepare the journal entries for the following: Problem 1 On Jan. 1, 2014, Native Co. granted 20,000 share options to each of its five directors. The options vest on Jan. 1, 2017 and expire on Dec. 31, 2017. Each option entitles the holder to purchase one, P20 par ordinary share for P40. The fair value of the options on grant date was P12. On the date of exercise, 80% of the options were exercised, and the rest of the options expired. Problem 2 On Jan. 1, 2014, Dream Corp. adopted a share option plan which grants each of the 30 employees the right to purchase 10,000, P10 par ordinary shares for P15 per share. The options were exercisable on Dec. 31, 2016 provided that the employee remains with Dream. The fair value of the shares on that day was P15, and the fair value of the options was P6. The company estimated that only 75% of the employees will be entitled to the options after three years. Dream’s share at the end of 2014, 2015 and 2016 were P21, P25 and P28, respectively. At the end of 2014, 3 employees left the company and it estimates that another 8 will leave the company by the end of 2016. At the end
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