Assume that Sarazan SA has a share-option plan for top management. Each share option represents the right

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Assume that Sarazan SA has a share-option plan for top management. Each share option represents the right to purchase a R$1 par value ordinary share in the future at a price equal to the fair value of the shares at the date of the grant. Sarazan has 5,000 share options outstanding, which were granted at the beginning of 2019. The following data relate to the option grant.
Exercise price for options.............................................R$40
Market price at grant date (January 1, 2019)........................R$40
Fair value of options at grant date (January 1, 2019)...............R$6
Service period.........................................................5 years
Instructions
a. Prepare the journal entry(ies) for the first year of the share-option plan.
b. Prepare the journal entry(ies) for the first year of the plan assuming that, rather than options, 700 shares of restricted shares were granted at the beginning of 2019.
c. Now assume that the market price of Sarazan shares on the grant date was R$45 per share. Repeat the requirements for P16.3a. and P16.3b..
d. Sarazan would like to implement an employee share-purchase plan for rank-and-file employees, but it would like to avoid recording expense related to this plan. Explain how employee share-purchase plans are recorded.
Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
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Intermediate Accounting IFRS

ISBN: 978-1119372936

3rd edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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