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ACT3127 Advanced Financial Accounting II

ACT3127 Advanced Financial Accounting II. FRS 2: Share-based payment Some illustrations. Contents: Illustration for SBP. Goods Services – immediate Services – vesting period. Goods: equity-settled SBP.

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ACT3127 Advanced Financial Accounting II

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  1. ACT3127 Advanced Financial Accounting II FRS 2: Share-based payment Some illustrations

  2. Contents: Illustration for SBP • Goods • Services – immediate • Services – vesting period

  3. Goods: equity-settled SBP A acquire a building by issuing 1m of its ordinary shares (par RM1.00). Its share has a market value of RM2.50 at the date of acquisition. The value of the building by professional valuer: a) RM20m b) cannot be measured reliably

  4. Goods: equity-settled SBP • Dt Building RM20m Cr Share Capital RM1m Cr Share Premium RM19m b) Dt Building RM2.5m Cr Share Capital RM1m Cr Share Capital RM1.5m

  5. Services: equity-settled SBP A manager granted 100,000 ESOS, valued at RM2 each, on 1st Jan 2005. The exercise price was RM3 each. Par value of the shares is RM1 each. a) the option vest immediately, and exercised immediately b) the option vest on 31st Dec 2006 and exercised right after.

  6. Services: equity – settled SBP 4 executives granted 100,000 ESOS each person, valued at RM2 each, on 1st Jan 2005 and will be vested on 1st Jan 2009, given that they stayed in the company till that date. The exercise price was RM3 each and the par value is RM1.00 each. • All stayed in the company until vest date and exercise the option • All stayed in the company until vest date but none exercise the option. • 1 executive left the company in 2007, the rest made it and exercise the option • All executives left the company in 2007.

  7. Service: cash – settled SBP An executive granted 100,000 appreciation rights on 1st Jan 2006, when the market price of the shares was RM2.70, given that she stayed in the company for the next 2 years. The followings are market prices for the shares and the rights: 31st Dec Shares Rights 2006 RM3.00 RM1.20 2007 RM4.00 RM1.50 2008 RM5.00 RM1.70

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