CIMAPRA19-F02-1 Exam - Topic 1 Question 71 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 71
Topic #: 1

ST granted 1,000 share appreciation rights (SARs) to its 100 employees on 1 December 20X7. To be eligible, employees must remain employed for 3 years from the grant date.In the year to 30 November 20X8, 10 staff left and a further 20 were expected to leave over the following two years. The fair value of each SAR was $12 at 1 December 20X7 and $15 at 30 November 20X8.

What is the accounting entry to record this transaction for the year to 30 November 20X8?

ADr Staff costs $350,000,Cr Non-current liabilities $350,000

BDr Staff costs $350,000,Cr Equity $350,000

CDr Staff costs $280,000, Cr Non-current liabilities $280,000

DDr Staff costs $280,000, Cr Equity $280,000

Show Suggested Answer

Suggested Answer: D

by Ressie at Jul 07, 2023, 08:42 AM

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Precious

6 months ago

So, is it really $280,000? That seems low.

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Lorean

6 months ago

Definitely not B, that doesn't make sense!

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Whitley

7 months ago

Wait, how do we account for the staff leaving?

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Matilda

7 months ago

I think the correct entry is A.

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Mabel

7 months ago

The fair value of SARs increased from $12 to $15.

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Merilyn

7 months ago

I think the total expense should be based on the number of employees remaining, but I can't recall if we should use the fair value at the grant date or the current fair value.

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Glory

8 months ago

I feel like the answer should involve the fair value at the grant date, but I'm confused about whether to credit liabilities or equity.

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Royce

8 months ago

This question reminds me of a similar practice one we did on share-based payments. I think we need to consider the vesting period and the number of employees still eligible.

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Antonette

8 months ago

I remember we discussed how to calculate the total expense based on the fair value of the SARs, but I'm not sure about the impact of the employees leaving.

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Katina

8 months ago

I'm a bit confused by the terminology here. I'll need to review my notes on MVPN before I can confidently answer this.

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Georgiana

8 months ago

I'm feeling pretty confident about this. Based on the information provided, it seems clear that the issue is a delivery gap where the staff are failing to provide the "quick, in-and-out service" that was promised. I'll select D.

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Lasandra

8 months ago

This seems like a tricky question. I'll need to think carefully about the best approach to ensure IT governance is adopted consistently across the enterprise.

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Lina

8 months ago

I'm a bit confused by the wording of the question. What exactly do they mean by "supporting geographically disparate users"? I'll need to read it over a few times to make sure I understand the context.

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Idella

1 year ago

Ah, the joys of share appreciation rights. It's like a treasure hunt, but instead of finding gold, you're trying to find the right accounting entry. Good thing I have my trusty calculator and a sense of humor!

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Dierdre

1 year ago

This is just like the time I had to explain compound interest to my grandma. Accounting can be a real brain-teaser, but at least it's not as bad as trying to figure out how to split the dinner bill with friends!

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Yasuko

12 months ago

C) Dr Staff costs $280,000, Cr Non-current liabilities $280,000

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Tamar

12 months ago

B) Dr Staff costs $350,000, Cr Equity $350,000

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Ronnie

12 months ago

A) Dr Staff costs $350,000, Cr Non-current liabilities $350,000

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Candida

1 year ago

Alright, time to channel my inner accountant! I'm going with option D, since it seems to match the information provided in the question.

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Gracia

1 year ago

Hmm, I'm not sure. Maybe I should have paid more attention in my accounting classes. This question is making my head spin!

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Stevie

1 year ago

Wait, why are we recording a liability? Isn't this a share appreciation rights plan? I think option B is the right answer, where the expense is recorded in equity.

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Audry

1 year ago

I think option C is the correct answer. The question mentions that the fair value of each SAR increased from $12 to $15, so the total liability should be $280,000 (20 employees x $15 per SAR).

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