On December 31, 2017, Santiago Inc.'s ordinary shares were selling for P55 per share. On this date,

the company creates a compensatory share option plan for its 70 employees. The plan document

states that each employee may purchase 500 shares of its P20 par ordinary shares for P35 per share

after one year if revenues reach P15M, after 2 years if revenues reach P18M, or after three years if

revenues reach P20M. On this date, based on a reliable option pricing model, Santiago Inc. estimates

that each option which can be exercised up to 2022 under the condition that the employee is still

within the employ of the company, has a fair value of P18.

The company has experience a stable 25% increase in revenues for the past 5 years and reasonably

expects the same trend for the upcoming years.

The following information are available from the company's records:

Year Actual

Revenues

Earned

Remaining

employees

at year end

Expected

additional

employee

resignation

2018 P14.5M 68 8

2019 17.5M 65 5

2020 20.5M 63 -

Forty-five employees exercised their vested options on June 15, 2021 while three employees resigned

on the same year without exercising their options, thus were forfeited.

Required:

59. What is the compensation expense related to the share option plan to be recognized in the 2018

financial statements?

60. What is the balance of the additional paid-in-capital account related to the share options as of

December 31, 2020?

61. What is the balance of the ordinary share options outstanding account as of December 31, 2021.

62. What is the resulting Share premium from the issuance of shares from the exercise of the

employee options.

This is from a book. Auditing problems by Cabrera