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Item 1 - When the financial controller was providing details on the employee share schemes at Knappa, it was identified that share options granted to

Item 1- When the financial controller was providing details on the employee share schemes at Knappa, it was identified that share options granted to the production staff on 1 July 2022 were not accounted for in the year ended 30 June 2023 financial statements. On 1 July 2022,1,000 share options were granted to each of Knappas 30 production employees, on the condition that the employees remain with the company for the next two years and that the share price increases from $26.50 per share on 1 July 2022 to $35 per share on 30 June 2024. If the share price target at 30 June 2024 is achieved, the share options can be exercised at any time over the subsequent 12 months (ie up to 30 June 2025). The fair value of each share option at the grant date was $5.60. You have obtained the following information:
In Year 30.06.2023
-Number of employees who departed during the year: 1
-Number of employees expected to depart in future years :2
-Knappa share price per share($): 28.35
In Year 30.06.2024
-Number of employees who departed during the year: 4
-Number of employees expected to depart in future years : N/A
-Knappa share price per share($): 32.15
1. This information was obtained at 30 June 2023; however, the appropriate accounting was not recognised. The impact of the employee share scheme is considered material to the financial statements.
Item 2- On 30 June 2024, Knappa entered into a five-year lease arrangement for a shop. The lessor gave permission for Knappa to install a wood-fired pizza oven on-site on the condition that it is removed and the shop is restored at the end of the lease arrangement on 30 June 2029. To encourage Knappa to agree to the lease arrangement, the lessor offered a one-off cash payment of $20,000, which was paid on 30 June 2024.
Additional information
Five annual lease payments of $240,000, payable on 30 June each year. The first payment will be due on 30 June 2025.
The wood-fired pizza oven was installed on 30 June 2024.
The estimated costs to remove the wood-fired pizza oven and restore the shop is $25,000 on 30 June 2029. The discounted amount of these estimated costs is correctly calculated at $19,588 at 30 June 2024.
The interest rate implicit in the lease is 8%.
Required (a) For the year ended 30 June 2024, prepare the journal entries to account for items 1 and 2. Show all workings. Ignore the impact of tax.

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