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On January, 2018 Leni Corp. grants each of its 200 employees in the production department share options. The share options will vest at the end of 2021, provided that the employees remain in the entity's employ and provided that the production increase by at least 50% by 2021. Actual production in 2018 (base year) is 120,000 units. If the production volume increase by an average of 50%-75% by 2021, each employee will receive 20 options each. If production volume inctease by 76% to 100% by 2021, each employee will receive 40 options each. If production volume increase by more than 100% by 2021, each employee will receive 50 options each. Four options plus P120 shall entitle the holder to acquire one ordinary shares (P100 par) at any time up to December 31, 2023. On the grant date, the company estimates that the share options have a fair value of P12 per option. There has been a 20% average increase in annual production for the past three years and that the company expects the same pattern during the vesting period. The following information are deemed relevant for your analysis: Actual employees Estimated additional employees who leaving the company will leave by the end 2021 Actual Year production 2018 20 120,000 2019 8 15 130,000 2020 11 140,000 2021 15 210.000 Requirements: 1. What is the compensation expense in 2019? 2. What is the carrying value of the ordinary share options outstanding as of December 31, 2020? 3. What is the compensation expense in 2021?

On January, 2018 Leni Corp. grants each of its 200 employees in the production department share options. The share options will vest at the end of 2021, provided that the employees remain in the entity's employ and provided that the production increase by at least 50% by 2021. Actual production in 2018 (base year) is 120,000 units. If the production volume increase by an average of 50%-75% by 2021, each employee will receive 20 options each. If production volume inctease by 76% to 100% by 2021, each employee will receive 40 options each. If production volume increase by more than 100% by 2021, each employee will receive 50 options each. Four options plus P120 shall entitle the holder to acquire one ordinary shares (P100 par) at any time up to December 31, 2023. On the grant date, the company estimates that the share options have a fair value of P12 per option. There has been a 20% average increase in annual production for the past three years and that the company expects the same pattern during the vesting period. The following information are deemed relevant for your analysis: Actual employees Estimated additional employees who leaving the company will leave by the end 2021 Actual Year production 2018 20 120,000 2019 8 15 130,000 2020 11 140,000 2021 15 210.000 Requirements: 1. What is the compensation expense in 2019? 2. What is the carrying value of the ordinary share options outstanding as of December 31, 2020? 3. What is the compensation expense in 2021?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On January, 2018 Leni Corp. grants each of its 200 employees in the production department share options. The share options will vest at the end of 2021, provided that the employees remain in the entity's employ and provided that the production increase by at least 50% by 2021. Actual production in 2018 (base year) is 120,000 units. If the production volume increase by an average of 50%-75% by 2021, each employee will receive 20 options each. If production volume inctease by 76% to 100% by 2021, each employee will receive 40 options each. If production volume increase by more than 100% by 2021, each employee will receive 50 options each. Four options plus P120 shall entitle the holder to acquire one ordinary shares (P100 par) at any time up to December 31, 2023. On the grant date, the company estimates that the share options have a fair value of P12 per option. There has been a 20% average increase in annual production for the past three years and that the company expects the same pattern during the vesting period. The following information are deemed relevant for your analysis: Estimated additional employees who Actual employees leaving the company will leave by the end 2021 Actual Year production 2018 20 120,000 2019 8. 15 130,000 2020 6. 11 140,000 2021 15 210.000 Requirements: 1. What is the compensation expense in 2019? 2. What is the carrying value of the ordinary share options outstanding as of December 31, 2020? 3. What is the compensation expense in 2021? 5.
Transcribed Image Text:On January, 2018 Leni Corp. grants each of its 200 employees in the production department share options. The share options will vest at the end of 2021, provided that the employees remain in the entity's employ and provided that the production increase by at least 50% by 2021. Actual production in 2018 (base year) is 120,000 units. If the production volume increase by an average of 50%-75% by 2021, each employee will receive 20 options each. If production volume inctease by 76% to 100% by 2021, each employee will receive 40 options each. If production volume increase by more than 100% by 2021, each employee will receive 50 options each. Four options plus P120 shall entitle the holder to acquire one ordinary shares (P100 par) at any time up to December 31, 2023. On the grant date, the company estimates that the share options have a fair value of P12 per option. There has been a 20% average increase in annual production for the past three years and that the company expects the same pattern during the vesting period. The following information are deemed relevant for your analysis: Estimated additional employees who Actual employees leaving the company will leave by the end 2021 Actual Year production 2018 20 120,000 2019 8. 15 130,000 2020 6. 11 140,000 2021 15 210.000 Requirements: 1. What is the compensation expense in 2019? 2. What is the carrying value of the ordinary share options outstanding as of December 31, 2020? 3. What is the compensation expense in 2021? 5.
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