On January 1, 2020, Easy Company granted 30,000 share options to employees. The share options will vest at the end of three years provided the employees remain in service until then. The option price is P60 and the entity's share price is also P60 at the date of grant. The par value of the share is P50. At the date of grant, the entity concluded that the fair value of the share options cannot be estimated reliably. The share options have a life of 6 years. This means that the options can be exercised within three years after vesting. All share options vested at the end of three years and no employees left during the three- year period. The share prices and the number of share options exercised are set out below. Share Price Share options exercised at year-end 2020 63 2021 66 2022 75 2023 88 10,000 2024 100 15,000 2025 90 5,000 Required: Determined the compensation expense for each year from 2020 to 2025 using the intrinsic value method. Prepare journal entries to record the compensation expense each year and the exercise of the share options.
On January 1, 2020, Easy Company granted 30,000 share options to employees.
The share options will vest at the end of three years provided the employees remain in service until then.
The option price is P60 and the entity's share price is also P60 at the date of grant. The par value of the share is P50.
At the date of grant, the entity concluded that the fair value of the share options cannot be estimated reliably.
The share options have a life of 6 years. This means that the options can be exercised within three years after vesting.
All share options vested at the end of three years and no employees left during the three- year period.
The share prices and the number of share options exercised are set out below.
Share Price Share options exercised at year-end
2020 63
2021 66
2022 75
2023 88 10,000
2024 100 15,000
2025 90 5,000
Required:
- Determined the compensation expense for each year from 2020 to 2025 using the intrinsic value method.
- Prepare
journal entries to record the compensation expense each year and the exercise of the share options.
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