REQUIRED:

Discuss the challenges faced by the International Accounting Standard Board (IASB) in the development of International Financial Reporting Standards (IFRSs), which form the basis of Hong Kong Financial Reporting Standards (HKFRSs). (5 marks)

PART D: The following scenario relates to questions 8 to 10. Whizzer Tech Ltd (WTL) operates two share-based payments schemes (Golden and Sliver) for its employees. WTL prepares its financial statements at 31 March each year. Golden scheme On 1 April 2018, WTL granted share options to 150 managers. The options are due to vest on 31 March 2021. The granting of the options was subject to two conditions: (1) the manager remains employed by WTL until 31 March 2021 and (2) the sales revenue of WTL grows by a cumulative amount of at least 30% in the three-year period ending on 31 March 2021. For cumulative growth in revenue within the three-year period in the range of 30% to 40%, each manager will be entitled to 250 options. For cumulative growth in revenue within the three-year period over 40%, each manager will be entitled to 300 options. On 1 April 2018, the fair value of a share option was $6.30. This had increased to $6.80 by 31 March 2019 and to $7.20 by 31 March 2020. During the two years ended 31 March 2020, information of expectations of revenue growth and manager retention in the three-year period ending 31 March 2021 changed as follows: Expected cumulative revenue growth in Growth in revenue in the year the three-year period Year ended 31 March 2019 15% 32% Year ended 31 March 2020 20% 45% Expected further departure of manager Manager leaving in the year leaving in the three-year vesting period Year ended 31 March 2019 30 Year ended 31 March 2020 14 Sliver scheme On 1 April 2018, WTL granted 500 share appreciation rights to each 10 senior executives. The rights are redeemable in cash on 31 March 2022 provided the executives remain employed by WTL until at least 31 March 2022. On 1 April 2018, WTL estimated that two of the 10 executives would leave in the period from 1 April 2018 to 31 March 2022 and this estimate remained unchanged at 31 March 2019. During the year ended 31 March 2020, one executive left WTL and on that date WTL estimated that the other 9 executives would remain in employment until 31 March 2022. During the year ended 31 March 2021, three executive left WTL and on that date WTL estimated that the other 6 executives would remain in employment until 31 March 2022. On 1 April 2018, the fair value of each share appreciation rights of WTL was estimated to be $9.0. The fair value of such rights had increased to $9.3 by 31 March 2019 and to $9.6 by 31 March 2020. It dropped to $8.7 by 31 March 2021. 15 8 PART D: The following scenario relates to questions 8 to 10. Whizzer Tech Ltd (WTL) operates two share-based payments schemes (Golden and Sliver) for its employees. WTL prepares its financial statements at 31 March each year. Golden scheme On 1 April 2018, WTL granted share options to 150 managers. The options are due to vest on 31 March 2021. The granting of the options was subject to two conditions: (1) the manager remains employed by WTL until 31 March 2021 and (2) the sales revenue of WTL grows by a cumulative amount of at least 30% in the three-year period ending on 31 March 2021. For cumulative growth in revenue within the three-year period in the range of 30% to 40%, each manager will be entitled to 250 options. For cumulative growth in revenue within the three-year period over 40%, each manager will be entitled to 300 options. On 1 April 2018, the fair value of a share option was $6.30. This had increased to $6.80 by 31 March 2019 and to $7.20 by 31 March 2020. During the two years ended 31 March 2020, information of expectations of revenue growth and manager retention in the three-year period ending 31 March 2021 changed as follows: Expected cumulative revenue growth in Growth in revenue in the year the three-year period Year ended 31 March 2019 15% 32% Year ended 31 March 2020 20% 45% Expected further departure of manager Manager leaving in the year leaving in the three-year vesting period Year ended 31 March 2019 30 Year ended 31 March 2020 14 Sliver scheme On 1 April 2018, WTL granted 500 share appreciation rights to each 10 senior executives. The rights are redeemable in cash on 31 March 2022 provided the executives remain employed by WTL until at least 31 March 2022. On 1 April 2018, WTL estimated that two of the 10 executives would leave in the period from 1 April 2018 to 31 March 2022 and this estimate remained unchanged at 31 March 2019. During the year ended 31 March 2020, one executive left WTL and on that date WTL estimated that the other 9 executives would remain in employment until 31 March 2022. During the year ended 31 March 2021, three executive left WTL and on that date WTL estimated that the other 6 executives would remain in employment until 31 March 2022. On 1 April 2018, the fair value of each share appreciation rights of WTL was estimated to be $9.0. The fair value of such rights had increased to $9.3 by 31 March 2019 and to $9.6 by 31 March 2020. It dropped to $8.7 by 31 March 2021. 15 8