On 1 July 2012 Lancaster Ltd grants 100 share options to each of its 50 employees conditional upon the employee working for the entity for the next 3 years.The entity estimates the fair value of each share option at $13.Based on probability estimates,25 employees are expected to leave the entity before the options vest.In accordance with AASB 2,how much remuneration expense related to the share option issue should Lancaster Ltd recognise for the year ended 30 June 2013?
A) zero
B) $10 833
C) $32 500
D) $65 000

Question

Quizplus · Accepted Answer

The expected number of employees who will vest is 50 - 25 = 25. The fair value of each option is $13, so the total fair value of the options that are expected to vest is 25 x $13 = $325. The remuneration expense for the year ended 30 June 2013 is 1/3 of this amount, or $325 / 3 = $108.33.

On 1 July 2012 Lancaster Ltd Grants 100 Share Options