Item 1 - When the financial controller was providing details on the employee share schemes at Knappa,
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Item When the financial controller was providing details on the employee share schemes at Knappa, it was identified that share options granted to the production staff on July were not accounted for in the year ended June financial statements. On July share options were granted to each of Knappas production employees, on the condition that the employees remain with the company for the next two years and that the share price increases from $ per share on July to $ per share on June If the share price target at June is achieved, the share options can be exercised at any time over the subsequent months ie up to June The fair value of each share option at the grant date was $ You have obtained the following information:
In Year
Number of employees who departed during the year:
Number of employees expected to depart in future years :
Knappa share price per share$:
In Year
Number of employees who departed during the year:
Number of employees expected to depart in future years : NA
Knappa share price per share$:
This information was obtained at June ; however, the appropriate accounting was not recognised. The impact of the employee share scheme is considered material to the financial statements.
Item On June Knappa entered into a fiveyear lease arrangement for a shop. The lessor gave permission for Knappa to install a woodfired pizza oven onsite on the condition that it is removed and the shop is restored at the end of the lease arrangement on June To encourage Knappa to agree to the lease arrangement, the lessor offered a oneoff cash payment of $ which was paid on June
Additional information
Five annual lease payments of $ payable on June each year. The first payment will be due on June
The woodfired pizza oven was installed on June
The estimated costs to remove the woodfired pizza oven and restore the shop is $ on June The discounted amount of these estimated costs is correctly calculated at $ at June
The interest rate implicit in the lease is
Required a For the year ended June prepare the journal entries to account for items and Show all workings. Ignore the impact of tax.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: