Cash-settled award: liability remeasured at each closing date, change in profit or loss, settlement and entries

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

Liability of the Hesperia plan L2

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

• Plan L2: compute the liability at 31 December 20X6.

• 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