Apex Limited (APL) is a management consultancy company headquartered in Singapore. After the successful implementation of a

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Apex Limited (APL) is a management consultancy company headquartered in Singapore. After the successful implementation of a share option plan for the senior management team in 20x1, the company has now decided to also roll-out the plan to the team leaders with effect from the year ended 31 December 20x3.

Details of the plan in operation in the 20x2 financial year are as follows:

Plan Alpha - senior management

On 1 January 20x1, APL granted 10,000 share options to each of the 20 senior managers. The options will vest on 31 December 20x4 upon completion of four years of service. There is a further condition that APL's revenue must increase by an average of at least 3% over the vesting period. Each option had a fair value of $8 at grant date. Actual and expected staff movement with regards to the senior managers for the next four financial years ended 31 December are as follows:

20x1

Two managers left APL to set up a rival consultancy firm, and no further leavers were expected.

20x2

Another manager left and no further leavers were expected.

20x3

There were no further leavers and APL's HR department has advised that no leavers are expected in the year ended 31 December 20x4.

The revenue of APL increased by 3.1% in the year ended 31 December 20x1 and 2.9% in the year ended 31 December 20x2. On 1 January 20x3 the terms of the plan were amended to remove the performance vesting condition.

Using the Black-Scholes-Merton model, the fair value of each option was determined as follows: