8 more employees left the company during the year, and Sun-Brights estimates that 8 more employees...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
8 more employees left the company during the year, and Sun-Brights estimates that 8 more employees would leave the company in 20x5, i.e. 29 out of 50 employees were estimated to remain in the company as at 31 December 20x5. There were no resignations during the year. All the remaining staffs exercised their SARs that vested on 31 December 20x4, at an intrinsic value (which is equal to the cash paid out) at $8.50. On 31 December 20x6, the remaining staff exercised their vested remaining SARs when the intrinsic value of each SAR was $12. Required: (c) Identify whether the above share-based payment plan is an equity-settled share-based payment transaction or a cash-settled share-based payment transaction. Briefly explain your reason. (d) Applying FRS 102 Share-based Payments, prepare the journal entries to record the transactions for the financial years ended 31 December 20x3 to 31 December 20x6. Narrations are not required. Ignore tax effect, if any. Part B This part of the question should be answered independently of Part A. Subsequent to the successful launch of the ESOP for the managers, Sun-Bright has now decided to roll out the plan to its sales staff. On 1 January 20x3, Sun-Bright granted 2,000 Share Appreciation Rights (SARS) to each of its top 50 sales staff. The SAR would vest conditional upon completion of service period and is structured as follow: Half of the SARs would vest on 31 December 20x4, and they would be forfeited if the employee leaves the company during the service period of two years. The other half of the SARs would vest on 31 December 20x5, and they would be forfeited if the employee leaves the company during the service period of three years. All the vested SARs will expire after four years from the grant date if not exercised. The estimated fair value (FV) of each SAR on the following dates is as follows: 31 December 20x3 FV with vesting date on 31 December 20x4 ($) FV with vesting date on 31 December 20x5 ($) 5.70 7.20 9.90 31 December 20x4 31 December 20x5 5.40 6.50 9.20 Actual and forecast staff movement for the next three financial years 31 December are as follows: 20x3 5 sales staff left the company in 20x3, and Sun-Bright estimates that 5 more employees would leave the company in 20x4 and a further 5 employees would leave in 20x5. 8 more employees left the company during the year, and Sun-Brights estimates that 8 more employees would leave the company in 20x5, i.e. 29 out of 50 employees were estimated to remain in the company as at 31 December 20x5. There were no resignations during the year. All the remaining staffs exercised their SARs that vested on 31 December 20x4, at an intrinsic value (which is equal to the cash paid out) at $8.50. On 31 December 20x6, the remaining staff exercised their vested remaining SARs when the intrinsic value of each SAR was $12. Required: (c) Identify whether the above share-based payment plan is an equity-settled share-based payment transaction or a cash-settled share-based payment transaction. Briefly explain your reason. (d) Applying FRS 102 Share-based Payments, prepare the journal entries to record the transactions for the financial years ended 31 December 20x3 to 31 December 20x6. Narrations are not required. Ignore tax effect, if any. Part B This part of the question should be answered independently of Part A. Subsequent to the successful launch of the ESOP for the managers, Sun-Bright has now decided to roll out the plan to its sales staff. On 1 January 20x3, Sun-Bright granted 2,000 Share Appreciation Rights (SARS) to each of its top 50 sales staff. The SAR would vest conditional upon completion of service period and is structured as follow: Half of the SARs would vest on 31 December 20x4, and they would be forfeited if the employee leaves the company during the service period of two years. The other half of the SARs would vest on 31 December 20x5, and they would be forfeited if the employee leaves the company during the service period of three years. All the vested SARs will expire after four years from the grant date if not exercised. The estimated fair value (FV) of each SAR on the following dates is as follows: 31 December 20x3 FV with vesting date on 31 December 20x4 ($) FV with vesting date on 31 December 20x5 ($) 5.70 7.20 9.90 31 December 20x4 31 December 20x5 5.40 6.50 9.20 Actual and forecast staff movement for the next three financial years 31 December are as follows: 20x3 5 sales staff left the company in 20x3, and Sun-Bright estimates that 5 more employees would leave the company in 20x4 and a further 5 employees would leave in 20x5.
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Find the values of the parameter p > 0 for which the following series converge. In k
-
In the early 2000s, China was running a large current account surplus. a. What did this suggest about its financial and capital account? b. China's private balance of payments was in surplus. What...
-
(a) From what kind of organization can a verifier receive digital certificates? (b) Are most CAs regulated? (c) Does a digital certificate indicate that the person or firm named in the certificate is...
-
Why may an auditor decide not to rely on a prescribed procedure?
-
Refer to Problem 6-61. Develop a net material requirements plan assuming that there are currently 150 units of Part A, 40 units of Part B, 50 units of Subassembly C, and 100 units of Part F currently...
-
An Espresso Coffee Bar is currently doing $600,000 a year in sales revenue. Beverage (mostly coffee) and Food Cost (pastries, sandwiches, etc.) is 28% and other variable costs at this level of sales...
-
Currently, the interest rate for a 10 -year bond issued by Ford is 7.62%, and the interest rate for a 10-year bond issued by General Motors is 6.84%. The liquidity risk premium for Ford is 0.57%,...
-
Supply chains typically generate massive amounts of data. Business Analytics and Business Intelligence help to make sense of all this data, uncovering patterns and generating insights for smarter,...
-
In March 2019, Dale and Lee, senior managers from technology firms, were attending an executive education programFinancial Management for Non-Financial Executivesat a highly-regarded business school....
-
Discuss the essential issues in Project Management. Discuss the current trends in Project Management. Discuss the future trajectory of Project Management. References: Project Management Institue....
-
Explain why the bank's second change implementation negatively affected staff morale. Explain three obstacles to the bank's successful change implementation. What roles are needed to successfully...
-
Read the "Taco Bell" case study and "How to Build a Business Case." Build a business case and then apply it to the Taco Bell case study by recommending a business case to answer John Martin's...
-
What is Hidalgo Countys medication error data for the last 5 years? Do medical errors negatively affect quality of care in Hidalgo County, Texas?
-
What are the main distinctions between the different schools of legal interpretation?
-
There are three general categories of capital budget scenarios: replacement, expansion, and investment in a NewCo. Describe the overall decision-making context for each. How do they draw on similar...
-
The overall process of creating a capital budget proposal has a lot of similarities to writing a business plan for a start-up company. Describe three aspects of the similarities between a budget...
-
In analysis, some focus seems to be on the need for NPV equations to be applied to projects that are mutually exclusive. But in practice we find that the lines are blurred in capital budgeting....
Study smarter with the SolutionInn App