You are employed in a firm of chartered accountants. You have been presented with the following information that has been extracted from the files of three clients of your firm: Beta Plc. On 1 April 2019, Alpha plc. granted options to 1,000 employees to purchase 100 shares in Beta plc. for a fixed price. The options will vest on 31 March 2024 subject to two conditions. The first vesting condition is that the employees must remain employed by Beta plc. throughout the whole vesting period up to the date of vesting. Best estimates are that 900 of the 1,000 will stay for the entire vesting period. Only 25 employees left in the year ended 31 March 2020. The other condition is that the Beta plc’s share price on 31 March 2024 should be at least K10. The share price on 31 March 2020 was only K8·50. The fair value of one share option was K1 on 1 April 2019, rising to K1·05 on 31 March 2020.  

Alpha plc Alpha plc. granted 100 share options to each of its 2000 employees on 1 January 2020, provided that they remain in service over the next three years. The fair value of each option is K30. During the year ended 31 December 2020, 200 employees left. The entity estimated that a further 240 employees would leave during the years 2021 and 2022. At 31 December 2020 the entity repriced its share options because the share price had fallen. The other vesting conditions remained unchanged. At the date of repricing, the fair value of each of the original share options granted (before taking the repricing into account) was K15. The fair value of each repriced share option was K20. During 2021, a further 120 employees left. The entity estimated that a further 120 employees would leave during year 2022. During year 2022 a further 120 employees left.  

5 Gamma Plc On I July 2019, Gamma plc granted 50,000 share options to each of its 15 directors. The options are exercisable once each director has worked for the company for three years commencing on 1 July 2019, although each director will be required to hold the shares for at least 2 years before they can subsequently sell them. Each director can alternatively opt to be paid cash instead of being issued with the shares once they vest. Under the cash alternative, each director would receive cash equivalent to the market value of 40,000 ordinary shares on the date of settlement. On 1 July 2019 each ordinary share in Gamma plc was quoted at K13.00 on the LuSE. However, the fair value of each ordinary share granted to the directors was only K12.50 on that date due to the restriction in rights attached to the shares requiring each director to hold the shares for at least two years after the vesting of the options. Each ordinary share in Gamm plc. was quoted at K12.80 at 1 April 2019, the beginning of the company’s financial year and K13.50 on 31 March 2020, the financial year end. During the year to 31 March 2020 one director left and only one more manager is expected to leave over the next two years. 

Required: 

Discuss, using appropriate supporting computations, how each of the above transactions will be accounted for by each of the three companies Alpha, Beta and Gamma for all the relevant accounting periods in accordance with IFRS2 Share Based Payment Transactions.