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CIMAPRA19-F02-1 Exam - Topic 1 Question 80 Discussion

LM granted 100 share options to each of its 400 employees on 1 January 20X7. The options will only vest if employees remain with LM for 3 years from the grant date. The fair value of each share option was $5 on 1 January 20X7.20 employees left in the year to 31 December 20X7 and at that date it was estimated that a further 35 would leave over the following two years.Which of the following journal entries did LM process to account for the share options in the year to 31 December 20X7, in accordance with IFRS2 Share-based Payments?
B) Dr Profit or loss $57,500 ; Cr Liabilities $57,500
A) Dr Profit or loss $57,500 ; Cr Other reserves within equity $57,500
C) Dr Profit or loss $172,500 ; Cr Other reserves within equity $172,500
D) Dr Profit or loss $172,500 ; Cr Liabilities $172,500

CIMAPRA19-F02-1 Exam - Topic 1 Question 80 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 80
Topic #: 1
[All CIMAPRA19-F02-1 Questions]

LM granted 100 share options to each of its 400 employees on 1 January 20X7. The options will only vest if employees remain with LM for 3 years from the grant date. The fair value of each share option was $5 on 1 January 20X7.

20 employees left in the year to 31 December 20X7 and at that date it was estimated that a further 35 would leave over the following two years.

Which of the following journal entries did LM process to account for the share options in the year to 31 December 20X7, in accordance with IFRS2 Share-based Payments?

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Suggested Answer: B

by Carey at Jan 22, 2024, 03:57 PM

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Tabetha
10 months ago
Option expense for 20X7 should be $172,500, right?
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Leslie
10 months ago
Totally agree, they need to factor in those 55 expected leavers!
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Shantell
10 months ago
Wait, how can they estimate future leavers? Seems off.
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Nickole
10 months ago
I think they should account for the expected leavers too.
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Rashad
10 months ago
The fair value of options is $5 each, and 400 employees got them.
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Haydee
10 months ago
If I recall correctly, the expense should reflect the options that are expected to vest, so we need to consider the employees who left.
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Providencia
11 months ago
I think we practiced a similar question where we had to account for share options, and I remember the journal entry involved recognizing the expense in profit or loss.
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Nieves
11 months ago
I’m a bit unsure about the total amount to recognize. Was it based on the fair value times the total options granted or adjusted for those who left?
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Corazon
11 months ago
I remember we discussed how to calculate the expense based on the fair value of the options and the number of employees expected to remain.
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Vonda
11 months ago
I think the key is to recognize that the expense should be recognized over the 3-year vesting period. So for the year to 31 December 20X7, we'd recognize 1/3 of the total expense.
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Albina
11 months ago
I'm a bit confused about how to calculate the total expense. Do we need to consider the estimated future leavers as well as the 20 who left in the year?
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Denise
11 months ago
Got it, that makes sense. I'm feeling more confident now - I'll go with option C.
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Cary
11 months ago
This question seems straightforward, but I want to make sure I understand the key details before selecting an answer.
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Belen
11 months ago
Okay, I think I've got it. Based on the information in the image, User 1 has read-only privileges to all objects in the Production folder, so I'll go with option A.
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Tegan
11 months ago
This seems like a straightforward question about selecting a TI platform. I think the key is to focus on the requirement to rank elements like intelligence sources, threat actors, attacks, and digital assets. That points me towards option D, Scoring, as the best feature to consider.
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Pamella
11 months ago
Hmm, I'm a bit unsure about this. I think I'll need to review the key concepts around corporate social responsibility to make the best choice here.
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Florinda
11 months ago
I'm pretty confident I know the answer to this one. Aggregate functions can't be placed in a variable port, that's not allowed. The other options seem to be true, so I'll go with A.
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Azzie
1 year ago
Hmm, this is a tough one. I'm leaning towards Option D, but I'm not totally sure. Maybe I should call a friend who's an accounting wizard. Or maybe I'll just ask the examiner for a hint. 'Hey, can I get a lifeline here?'
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Diane
1 year ago
I'm not sure, but Option D does sound like it could be the right answer.
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Ardella
1 year ago
I agree, Option D seems to be the most logical choice.
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Geraldo
1 year ago
I think Option D is the correct one. It makes sense to me.
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Hildred
1 year ago
Oof, share-based payments can be a real headache. I'm going to go with Option C, but I better double-check my math. Wait, did they say the fair value was $5 per option? That's a steal!
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Layla
1 year ago
Yes, the fair value of $5 per option does seem like a good deal.
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Josefa
1 year ago
I think Option C is the correct journal entry.
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Margery
1 year ago
I agree, share-based payments are complex.
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Lajuana
1 year ago
Alright, let's do this! IFRS2 is all about the fair value, so I'm thinking Option A looks good. But wait, what about that estimated 35 more leaving over the next two years? Gotta factor that in.
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Jordan
1 year ago
Let's go with Option A and adjust for the estimated employee turnover in the next two years.
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Susy
1 year ago
Option A looks good because it recognizes the fair value of the share options granted.
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Louvenia
1 year ago
We need to account for the estimated 35 employees leaving over the next two years.
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Wilbert
1 year ago
I'm not sure, but I think it might be D.
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Coleen
1 year ago
Hmm, this looks like a tricky one. Let's see, we have 400 employees granted 100 share options each, and 20 employees left in the first year. Gotta be careful with that vesting condition.
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Paris
1 year ago
B) Dr Profit or loss $57,500 ; Cr Liabilities $57,500
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Tamra
1 year ago
A) Dr Profit or loss $57,500 ; Cr Other reserves within equity $57,500
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Jamal
1 year ago
B) Dr Profit or loss $57,500 ; Cr Liabilities $57,500
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Wilburn
1 year ago
A) Dr Profit or loss $57,500 ; Cr Other reserves within equity $57,500
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Troy
1 year ago
I disagree, I believe the correct answer is C.
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Timothy
1 year ago
I think the answer is A.
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Sonia
1 year ago
I'm not sure, but I think it might be D.
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Brandee
1 year ago
I disagree, I believe the correct answer is C.
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Carylon
1 year ago
I think the answer is A.
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