CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 79 Discussion

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

Question #: 79
Topic #: 1

On 1 January 20X4 EF grants each of its 125 employees500 share options on the condition that they remain in employment for 3 years. During the year to 31 December 20X4 10 employees left and It is expected that a further 25 will leave before the end of the vesting period.

The fair value of each shareoption is $30 on 1 January 20X4 and $45 on 31 December 20X4.

What is the journal entry in respect of these share options in EF's financial statements for the year ended 31 December 20X4?

AOption A

BOption B

COption C

DOption D

Show Suggested Answer

Suggested Answer: A, B, C, D

by Audry at Dec 23, 2023, 07:34 PM

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Mila

2 months ago

So, we should debit the share option expense for the employees who left and credit the share option reserve.

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Lawanda

2 months ago

Yes, the journal entry should reflect the decrease in the number of employees eligible for the share options.

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Sanda

2 months ago

Ooh, I bet this is one of those 'calculate the expense' type questions. Time to pull out my accounting cheat sheet!

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Mignon

26 days ago

B) Debit share option expense $6,250, Credit share option reserve $6,250

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Shaniqua

27 days ago

A) Debit share option expense $3,750, Credit share option reserve $3,750

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Ngoc

28 days ago

B) Option

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Loise

1 months ago

A) Option

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Fannie

2 months ago

Haha, 'fair value' of share options? I guess they're trying to make us work for that one!

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Mila

2 months ago

I think we need to consider the impact of employees leaving on the share options.

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Norah

2 months ago

Wait, did they say 'vesting period'? I better make sure I understand how that affects the accounting treatment.

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Fernanda

21 days ago

It's important to understand the impact of employees leaving before the end of the vesting period.

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Viola

28 days ago

The fair value of the options will impact the accounting treatment.

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Louis

1 months ago

The vesting period is the time an employee must work for the company before they can exercise their options.

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Katie

2 months ago

Employee stock options are a form of compensation.

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Shanda

2 months ago

I agree. And we need to account for the change in fair value of the share options as well.

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Katheryn

2 months ago

Hmm, this question seems tricky. I'll need to carefully consider the details about the share options and the expected employee turnover.

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Lavina

2 months ago

Yes, we should also consider the number of employees who left and are expected to leave before the end of the vesting period.

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Shanda

3 months ago

I think we need to calculate the total number of share options granted first.

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