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

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

Question #: 80
Topic #: 1

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?

ADr Profit or loss $57,500 ; Cr Other reserves within equity $57,500

BDr Profit or loss $57,500 ; Cr Liabilities $57,500

CDr Profit or loss $172,500 ; Cr Other reserves within equity $172,500

DDr Profit or loss $172,500 ; Cr Liabilities $172,500

Show Suggested Answer

Suggested Answer: B

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

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Tabetha

5 months ago

Option expense for 20X7 should be $172,500, right?

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Leslie

5 months ago

Totally agree, they need to factor in those 55 expected leavers!

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Shantell

5 months ago

Wait, how can they estimate future leavers? Seems off.

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Nickole

5 months ago

I think they should account for the expected leavers too.

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Rashad

5 months ago

The fair value of options is $5 each, and 400 employees got them.

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Haydee

6 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

6 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

6 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

6 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

6 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

6 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

6 months ago

Got it, that makes sense. I'm feeling more confident now - I'll go with option C.

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Cary

6 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

6 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

6 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

6 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

6 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

11 months 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

10 months ago

I'm not sure, but Option D does sound like it could be the right answer.

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Ardella

10 months ago

I agree, Option D seems to be the most logical choice.

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Geraldo

10 months ago

I think Option D is the correct one. It makes sense to me.

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Hildred

11 months 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

11 months ago

Yes, the fair value of $5 per option does seem like a good deal.

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Josefa

11 months ago

I think Option C is the correct journal entry.

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Margery

11 months ago

I agree, share-based payments are complex.

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Lajuana

11 months 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

10 months ago

Let's go with Option A and adjust for the estimated employee turnover in the next two years.

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Susy

10 months ago

Option A looks good because it recognizes the fair value of the share options granted.

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Louvenia

11 months ago

We need to account for the estimated 35 employees leaving over the next two years.

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Wilbert

12 months ago

I'm not sure, but I think it might be D.

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Coleen

12 months 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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