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

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

Question #: 71
Topic #: 1

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?

ADr Staff costs $350,000,Cr Non-current liabilities $350,000

BDr Staff costs $350,000,Cr Equity $350,000

CDr Staff costs $280,000, Cr Non-current liabilities $280,000

DDr Staff costs $280,000, Cr Equity $280,000

Show Suggested Answer

Suggested Answer: D

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

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Idella

27 days 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

28 days 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

7 days ago

C) Dr Staff costs $280,000, Cr Non-current liabilities $280,000

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Tamar

8 days ago

B) Dr Staff costs $350,000, Cr Equity $350,000

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Ronnie

10 days ago

A) Dr Staff costs $350,000, Cr Non-current liabilities $350,000

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Candida

29 days 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

29 days 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 months 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 months 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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