On January 1, 2020, ABC Corporation granted an employee an option to purchase 3,000 shares of ABC’s P5 par value ordinary share at P20 each. The option became exercisable on December 31, 2022. The options was exercised on January 10, 2023. The market prices of ABC’s share capital were as follows: January 1, 2020 – P30; December 31, 2020 – P50; December 31,2021 – 55; December 31, 2022 – 65; January 10, 2023 – P75. The company cannot reliably determine the fair value of the share option, so it decided to use the intrinsic method. For the year 2022, how much should ABC recognize as compensation expense?

On January 1, 2020, ABC Corporation granted an employee an option to purchase 3,000 shares of ABC’s P5 par value ordinary share at P20 each. The option became exercisable on December 31, 2022. The options was exercised on January 10, 2023. The market prices of ABC’s share capital were as follows: January 1, 2020 – P30; December 31, 2020 – P50; December 31,2021 – 55; December 31, 2022 – 65; January 10, 2023 – P75. The company cannot reliably determine the fair value of the share option, so it decided to use the intrinsic method. For the year 2022, how much should ABC recognize as compensation expense?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 5MC

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