Cash-settled award: liability remeasured at each closing date, change in profit or loss, settlement and entries: Rights — 31 December 20X7

Context

Maridan SA (fictitious entity) closes its accounts on 31 December. On 1 January 20X6, it granted to 50 executives share appreciation rights payable in cash; it also remunerated a consulting firm in shares. You prepare the schedule of the liability from 20X6 to 20X8, the entries and the information to disclose.

Assignment

Liability of the Maridan share appreciation rights

Purpose of the workpaper

Record the fair value of the right at the closing date (which reflects the market conditions and the non-vesting conditions), the number of rights expected to vest (which reflects the service and non-market performance conditions) and the elapsed share of the vesting period. Compute the liability at the closing date, reconcile it with the opening liability, the expense of the period, the decrease in fair value and the cash paid, then prepare the entries. The fair values, the numbers and the elapsed share are case data; the liability is remeasured until settlement.

Questions of the file covered by this workpaper

• Compute the liability at 31 December 20X6.
• Compute the liability at 31 December 20X7.
• Compute the liability at the settlement date of 20X8.
• Compute the expense of 20X6 and 20X7 and the decrease in fair value of 20X8.
• Reconcile the closing liability of 20X7 and 20X8 with the opening liability.

• MemoCompany profile and case conventionsOpen
• ContractRules of the share appreciation rightsOpen
• ScheduleValuations and estimates at each dateOpen
• ContractAgreement with the consulting firmOpen
• MemoValuation report of the rightsOpen
• InvoiceInsurance premiumOpen