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

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?
D) Dr Staff costs $280,000, Cr Equity $280,000
A) Dr Staff costs $350,000,Cr Non-current liabilities $350,000
B) Dr Staff costs $350,000,Cr Equity $350,000
C) Dr Staff costs $280,000, Cr Non-current liabilities $280,000

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

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 71
Topic #: 1
[All CIMAPRA19-F02-1 Questions]

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?

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Suggested Answer: D

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

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Precious
10 months ago
So, is it really $280,000? That seems low.
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Lorean
10 months ago
Definitely not B, that doesn't make sense!
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Whitley
10 months ago
Wait, how do we account for the staff leaving?
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Matilda
10 months ago
I think the correct entry is A.
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Mabel
10 months ago
The fair value of SARs increased from $12 to $15.
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Merilyn
11 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
11 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
11 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
11 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
11 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
11 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
11 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
11 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
1 year ago
C) Dr Staff costs $280,000, Cr Non-current liabilities $280,000
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Tamar
1 year ago
B) Dr Staff costs $350,000, Cr Equity $350,000
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Ronnie
1 year 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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Avery
1 year ago
Option C: Dr Staff costs $280,000, Cr Non-current liabilities $280,000
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Felice
1 year ago
So, the total liability should be $280,000 for the 20 employees.
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Aretha
1 year ago
I agree, the fair value of each SAR increased to $15.
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Michel
1 year ago
I think option C is the correct answer.
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Nickolas
1 year ago
Why do you think it's C?
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Dulce
1 year ago
I disagree, I believe the answer is C.
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Nickolas
1 year ago
I think the answer is A.
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Tamar
1 year ago
Because the total cost of SARs granted should be recognized as staff costs, not as a liability.
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Shayne
1 year ago
Why do you think it's C?
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Tamar
1 year ago
I disagree, I believe the correct answer is C.
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Shayne
1 year ago
I think the answer is A.
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