On January 1, 2021, an entity granted the employee option to buy 200,000 shares with P20 par for P30 per share. The employees exercised the options on January 1, 2024. Quoted market prices of shares are as follows: 2021 P34 2023 P42 2022 P39 2024 P44 The service period is for two years beginning January 1, 2021. The fair value of the share options cannot be measured. 6) What is the compensation expense for 2021? A. 400,000 B. 200,000 C. 300,000 D. 800,000 7) What is the compensation expense for 2022? A. 1,800,000 B. 1,000,000 C. 1,400,000 D. 400,000 8) What is the compensation expense for 2023? A. 200,000 B. 600,000 C. 400,000 D. 0 9) What amount should be credited to share premium upon exercise of the share options on January 1, 2024? A. 3,800,000 B. 4,400,000 C. 4,800,000 D. 4,000,000

SARs Changing Estimate on Employees and Vesting Period Numbers 10, 11 and 12 Babe Time Company issued share appreciation rights (SARs) to 20 of its employees. The SARs will vest at the end of 3 years, provided the employees remain with the company and provided the average revenue growth over the period will exceed 5%. If the average grown in revenue is between 5 and 10 percent, each employee will receive 1,000 SARs. If the average growth in revenue is between 11 and 15 percent, each will receive 2,000 SARs. If the average growth in revenue is more that 15 percent, the employees will each receive 3,000 SARs. On the grant date, each SAR is determined to have a fair value of P60. Baby Time expects average revenue growth rate of 8% during the 3-year vesting period, and that 8 of its employee will leave before the vesting period ends. 10) Assuming the estimate do not change during Year 1, what amount of compensation expense should be included in Babe Times income statement in Year 1? A. 480,000 B. 400,000 C. 240,000 D. 160,000 11) At the end of Year 2, revenue growth projection is 11 percent and 16 employees are expected to remain in the entitys employ. Also, the fair value of each SAR is P70. What amount of compensation expense should be reported in Babe Times income statement in Year 2? A. 1,493,333 B. 1,253,333 C. 1,093,333 D. 720,000 12) At the end of Year 3, revenue growth was 18 percent and 18 employees did not leave the company, further, the fair value of each SAR is P80. What amount of compensation expense should be reported in Babe Times incomes statement in Year 3? A. 2,826,667 B. 1,493,333 C. 1,386,667