Share-based award: settlement method, grant date, classification of the conditions and settlement alternative: Plan 1 — revenue target

Context

Belmora SA (fictitious entity) closes its accounts on 31 December 20X7. The preparer builds the file of its two share-based plans, submitted to a review check: an option plan for managers, settled in shares and modified during the year, and a plan of share appreciation rights for executives, settled in cash. Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Assignment

Classification of the plans, grant date and conditions

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

• Classify the settlement method of each plan.
• Fix the grant date of plan 2.
• Classify the conditions of plans 1 and 2.

• MemoCompany profile and file conventionsOpen
• ContractRules of plan 1 (options)Open
• ScheduleManagement estimates and ledger of plan 1Open
• MinutesMinutes of the modification of plan 1Open
• ContractRules of plan 2 (share appreciation rights)Open
• ScheduleValuation of the rights at 31 December 20X7Open
• MemoManagement note on the expected numbersOpen
• MemoInputs of the valuation of the plansOpen
• MemoAcceptance letters of the executivesOpen
• InvoiceLegal fees invoiceOpen