SHARE BASED PAYMENTS

Scenario $1$

At the beginning of year $1,$ an entity enters into a share$-$based payment arrangement with an employee. The employee is informed that the maximum potential award is $40,000$ shares, $10,000$ of which will vest at the end of year $1,$ and $10,000$ more at the end of each of years $2$ to $4.$ Vesting of each of the four tranches of $10,000$ shares is conditional on:

$($a$)$ the employee having been in continuous service until the end of each relevant year; and

$($b$)$ revenue targets for each of those four years, as communicated to the employee at the beginning of year $1,$ having been attained.

In this case, the terms of the award are clearly understood by both parties at the beginning of year $1,$ and this is therefore the grant date under IFRS $2.$

If everything turns out exactly as expected, then please show the calculations and the journal entries.

Scenario $2$

At the beginning of year $1,$ an entity enters into a share$-$based payment arrangement with an employee. The employee is informed that the maximum potential award is $40,000$ shares, $10,000$ of which will vest at the end of year $1,$ and $10,000$ more at the end of each of years $2$ to $4.$ Vesting of each of the four tranches of $10,000$ shares is conditional on:

$($a$)$ the employee having been in continuous service until the end of each relevant year; and

$($b$)$ revenue targets for each of those four years, to be communicated to the employee at the beginning of each relevant year in respect of that year only, having been attained.

Imagine that the targets are met. In this case explain the calculations and the accounting Journal entries.

Scenario $3$

An entity grants $100$ share options to each of its $500$ employees. Vesting is conditional upon the employees working for the entity over the next three years. The entity estimates that the fair value of each share option is $15.$ The entity$$s best estimate at each reporting date is that $100($i$.$e$.20\%)$ of the original $500$ employees will leave during the three year period and therefore forfeit their rights to the share options.

If everything turns out exactly as expected, then please show the calculations and the journal entries.