You have been asked to review a number of accounting-related transactions that have arisen in Hayes Co, a medium-sized firm that manufactures plastic storage equipment for industrial and commercial use. The company prepares its accounts in accordance with International Financial Reporting Standards (IFRS) and has a financial year-end of 31 January every year.

On 1 February 2020, Hayes granted 100 share options to their 10 directors. The following information is available:

The fair value of share options:

1 February 2020: £1 per option

31 January 2021: £1.50 per option

31 January 2022: £2 per option

The share options will vest on 31 January 2022 to any director that remains with Hayes until that date. By 31 January 2021, one director had left the company, and another two were expected to leave over the next year. By 31 January 2022, only one more director had left the company.

Required:

Explain and justify how Hayes would account for this transaction, preparing calculations where appropriate and showing the presentation requirements as at 31 January 2022.

Answer rating: 100% (QA)

The calculation of the options expense for the year ended 31 January 2021 would be ... View the full answer