On 1 June 20x3, Delphi Company granted 100,000 share options with an exercise price of $3 to
Question:
On 1 June 20x3, Delphi Company granted 100,000 share options with an exercise price of $3 to its chief executive officer. The fair value of the options was $2.30 at the date of the grant. The following conditions relate to the grant:
(a) The vesting date was 1 June 20x6. The grantee must remain an employee at the vesting date.
(b) The share options did not vest until the share price had increased to above $4.
The chief executive officer was not expected to leave the company after 1 June 20x6. Delphi Company’s year-end is 31 May. Ignore taxation.
Required
1. Assume that the share price of Delphi Company did not go above $4 at all. Prepare the journal entries for the years ended 31 May 20x4, 20x5 and 20x6.
2. Assume that the share price of Delphi Company on 1 June 20x6 was $4.30 and the chief executive officer exercised his share options. Prepare the journal entries on 1 June 20x6.
Step by Step Answer:
Advanced Financial Accounting An IFRS Standards Approach
ISBN: 9781285428765
4th Edition
Authors: Pearl Tan, Chu Yeong Lim, Ee Wen Kuah