CIMA Exam CIMAPRA19-F02-1 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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Azzie

1 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

23 hours ago

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

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Ardella

7 days ago

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

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Geraldo

17 days ago

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

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Hildred

1 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

27 days ago

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

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Josefa

28 days ago

I think Option C is the correct journal entry.

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Margery

1 months ago

I agree, share-based payments are complex.

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Lajuana

2 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

7 days ago

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

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Susy

15 days ago

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

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Louvenia

27 days ago

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

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Wilbert

2 months ago

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

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Coleen

2 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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