On 1 July 2019 Fraser Ltd granted 200 options to each of its 100 employees. The share options will vest on 30 June 2021 if the employees remain employed with the company on that date. The share options have a life of four years. The exercise price is $10, which is also Fraser's share price at the grant date. Fraser is unable to reliably estimate the fair value of the share options at the grant date. Fraser's share price and the number of options exercised are set out below. Share options may only be exercised at year end.
$$\begin{array} { | l | l | l | }
\hline \text { Year ended } & \begin{array} { l }
\text { Share price } \
\text { at year end }
\end{array} & \begin{array} { l }
\text { Number of options } \
\text { exercised at year end }
\end{array} \
\hline \text { 30 Jure } 2020 & \$ 11 & - \
\hline \text { 30 Jurne } 2021 & \$ 12 & - \
\hline 30 \text { Jure } 2022 & \$ 13 & { 8 2 0 0 } \
\hline \text { 30 Jure } 2023 & \$ 14 & 10000 \
\hline
\end{array}$$ The formula to calculate the remuneration expense for the year ended 30 June 2022 is:
A) 8200 x ($13-$12)
B) 8200 x $13
C) (8200 + 10 000) x ($13-$10)
D) (8200 + 10 000) x ($13-$12)

Question

On 1 July 2019 Fraser Ltd granted 200 options to each of its 100 employees. The share options will vest on 30 June 2021 if the employees remain employed with the company on that date. The share options have a life of four years. The exercise price is $10, which is also Fraser's share price at the grant date. Fraser is unable to reliably estimate the fair value of the share options at the grant date. Fraser's share price and the number of options exercised are set out below. Share options may only be exercised at year end.
$$\begin{array} { | l | l | l | } 
\hline \text { Year ended } & \begin{array} { l } 
\text { Share price } \
\text { at year end }
\end{array} & \begin{array} { l } 
\text { Number of options } \
\text { exercised at year end }
\end{array} \
\hline \text { 30 Jure } 2020 & \$ 11 & - \
\hline \text { 30 Jurne } 2021 & \$ 12 & - \
\hline 30 \text { Jure } 2022 & \$ 13 &  { 8 2 0 0 } \
\hline \text { 30 Jure } 2023 & \$ 14 & 10000 \
\hline
\end{array}$$ The formula to calculate the remuneration expense for the year ended 30 June 2022 is:
A) 8200 x ($13-$12)
B) 8200 x $13
C) (8200 + 10 000) x ($13-$10)
D) (8200 + 10 000) x ($13-$12)

Quizplus · Accepted Answer

The remuneration expense for the year ended 30 June 2022 is calculated as the number of options exercised during the year multiplied by the difference between the exercise price and the share price at the date of exercise. In this case, 8200 options were exercised at a share price of $13, resulting in a remuneration expense of (8200 x ($13-$12)) = $82,000.

On 1 July 2019 Fraser Ltd Granted 200 Options to Each