Share-based award: settlement method, grant date, classification of the conditions and settlement alternative: Plan L1

Context

Hesperia Holding SA (fictitious entity), the parent company, and its subsidiary Hesperia Services SAS close their accounts on 31 December 20X6. Several share-based plans each call for a different treatment: a choice of the counterparty, two choices of the entity, a plan for the employees of the subsidiary, a net settlement for the tax withholding, a deferred tax and replacement awards following the acquisition of Lumora SA. You prepare the treatment note and the entries of the parent company.

Assignment

Classification of the Hesperia plans K, L1, L2 and M

Purpose of the workpaper

Record the terms of the award, the approvals and the dates, the conditions of the plan and, where the entity or the counterparty can choose the settlement method, the settlement practice of the entity. Classify the settlement method, fix the grant date, classify each condition (service, non-market performance, market, non-vesting) and, for a settlement alternative at the choice of the entity, assess whether it has a present obligation to settle in cash. The terms, the dates and the amounts are case data; each classification remains a supported judgment.

Questions of the file covered by this workpaper

• Plan K: how is the award accounted for, and what is the fair value of each alternative?
• Plans L1 and L2: does Hesperia have a present obligation to settle in cash? How is each plan classified?
• Plan M: how does the subsidiary account for it in its separate financial statements?

• MemoGroup profile and case conventionsOpen
• ContractPlan K: chief financial officerOpen
• MinutesPlans L1 and L2: settlement at the choice of the entityOpen
• MemoPlan M: employees of the subsidiaryOpen
• ContractPlan N: exercise with net settlementOpen
• SchedulePlan P: deferred tax and valuationOpen
• MemoAcquisition of Lumora SAOpen
• InvoiceAudit feesOpen