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Practical caseIFRS 2L1 · Fundamental

Share-linked plans: settlement method, grant date and first expense

6 documents6 tasks≈ 30 min
0 / 10 items completed
Standards
IFRS 2 — Share-based Payment
Assistance levelFull guidance · strong assistance
  • Method: shown
  • Checklist: shown
  • Hints: shown
  • Step-by-step work: shown

Case brief

Situation

Daveline SA (fictitious entity) closes its accounts on 31 December 20X6. It set up two remuneration arrangements in 20X6: a share option plan for its employees (plan A) and a cash bonus linked to the price of its share for executives (bonus B). You prepare the classification note and the first entry of plan A.

Your assignment

Classify the settlement method of the option plan (A) and of the bonus linked to the share price (B); determine the grant date of plan A; compute the number of options granted, the number expected to vest and the expected total cost; record the 20X6 expense of plan A and present its effect on the financial statements; conclude. One document is not useful.

Work on this file as you would in practice: read the situation, open the documents, sort the useful information, then carry out the work requested. The solution is revealed once you submit.

Fundamental level: the method, help and references are shown.

Method

  1. Read the brief and the assignment.
  2. Open each document and spot the relevant data.
  3. Carry out the work in the suggested order.
  4. Submit, then read the conclusion and the model answer.

File checklist

  • Open each piece (0 / 6 consulted) · to do
  • Sort the information in the pieces · to do
  • Carry out the work (0 / 10) · to do
  • Submit the file, then assess yourself · to do

Documents

File documents

6 documents: open each one to read it.

Document 1Memo

Company profile and case conventions

Daveline SA (fictitious entity) closes its accounts on 31 December 20X6; its functional currency is the euro. Case conventions: amounts in EUR; the fair value per option at the grant date is the one of the expert, case data; case convention (pedagogical assumption, not attributed to IFRS 2): 10 % of the employees leave the entity before vesting and the best estimate of the departure is unchanged at the closing date; the expense of one year is the elapsed share of the vesting period applied to the expected total cost; the entry is illustrative.

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Eligible employees200 units
Options per employee100 units
Exercise price€15.00
Fair value of an option at the grant date€8.00
Rights of bonus B10,000 units
Employees expected to remain180 units
Training invoice€7,500.00

Sorting the information

Not every document matters: identify those that affect the accounting treatment.

Part 1 · Classification · Analysis

Sort each document: does it affect the accounting treatment?

Drag each item into its category, or tap the category under the item.

To sort6

  • Company profile and case conventions

  • Rules of option plan A

  • Approval timeline of plan A

  • Bonus B

  • Payroll note: plan A in 20X6

  • Training invoice

Relevant to the treatment0

    No effect0

      Questions

      Work programme

      6 tasks in the order of the file. Calculations, entries and effects on the financial statements are marked; written answers are self-assessed against the solution.

      1. Task 1Professional judgement

        Classify the settlement method of plan A and of bonus B.

        Distinguish the case data, the assumption and your judgment.

        This answer is not marked automatically: after submitting, you will compare it with the solution.

      2. Task 2Professional judgement

        Determine the grant date of plan A.

        Distinguish the case data, the assumption and your judgment.

        This answer is not marked automatically: after submitting, you will compare it with the solution.

      3. Task 3Analysis

        Compute the number of options granted, the number expected to vest and the expected total cost.

        Set out the facts, the question raised, then your analysis.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Compute the number of options granted, the number expected to vest and the expected total cost.

        1. units
        2. units
        3. €

        Checks

        • 0 / 3 steps entered
        • Amounts readable

        Result: Expected total cost of plan A

        This answer is not marked automatically: after submitting, you will compare it with the solution.

      4. Task 4Journal entries

        Record the 20X6 expense of plan A.

        Identify the accounts affected and the direction of each movement; check the balance.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Record the 20X6 expense of plan A.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

        Calculator

        Click in an answer field to be able to insert the result.

        Part 2 · Journal entry · Journal entries

        Entry 1 of 1

        One line = one account and one side. Add a line if the entry needs more; the balance check updates live.

        1. Line 1

        2. Line 2

        TotalsDebit0Credit0

      5. Task 5Effects on the financial statements

        What is the effect of the entry on the financial statements?

        For each financial statement, state the line affected, the direction and the amount.

        Part 1 · Classification · Analysis

        State the direction of the effect on each financial statement aggregate.

        1. Financial position (balance sheet)

        2. Profit or loss

        3. Other comprehensive income

        4. Equity

        Calculator

        Click in an answer field to be able to insert the result.

        Part 2 · Calculation · Analysis

        Quantify the effect on the aggregates concerned.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      6. Task 6Conclusion

        Write the conclusion.

        Write a conclusion that cites the facts and the treatment chosen.

        This answer is not marked automatically: after submitting, you will compare it with the solution.

      Workspace

      Your working draft for this file: points noted, leads, intermediate calculations.

      Saved on this device only; never graded.

      Conclusion

      Submission and solution

      Complete every item of the file to submit it (0 / 10).

      Document this file

      These working papers use the data and results of this case.

      Normative references

      • IFRS 2 §30
      • IFRS 2