Will give unhelpful to incorrect answers

On December 31, 2017, Kalinga Co. issued share appreciation rights to 20 of its employees. The

rights will vest at the end of 3 years provided the employees remain with the company and provided

further that the average revenue growth over the same period is at 10%. The following are the

approved terms of the said rights:

If the average revenue is 10 to 15%, each employee will receive 10,000 share appreciation

rights.

If the average revenue is 16 to 20%, each employee will receive 20,000 appreciation rights.

If the average growth more than 20%, each employee will receive 30,000 rights.

On the grant date, each share appreciation right is determined to have a fair value of P6, Kalinga

expects an average growth rate of 12.5 percent during the 3 year vesting period and that 4 employees

will ultimately resign before the vesting period ends.

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

Year

Actual revenue

growth rate for the

year

Estimated

resignations

Fair Market

Value of the

share

appreciation

rights

2018 10% 4 6.00

2019 15% 4 6.75

2020 25% 5* 7.00

*actual

Requirements:

69. How much is the compensation expense in relation to the share appreciation rights to be

recognized in 2018?

70. How much is the compensation expense in relation to the share appreciation rights to be

recognized in 2019?

71. How much is the compensation expense in relation to the share appreciation rights to be

recognized in 2020?

72. What is the liability for the share appreciation rights to be recognized as of December 31, 2020?

AP-100Q: Problem 17

On January 1, 2019, Symphony grants its president the right to choose either 10,000 ordinary shares

or to receive cash payment equal to 8,000 shares. These are to vest after rendition of three years of

service. Par value of the company's share of stock is P40. The president exercised his rights on

September 30, 2022. The fair value information follow:

FMV

Compound instrument, 1/1/2019 P50

Shares 1/1/2019 52

Shares 12/31/2019 65

Shares 12/31/2020 74

Shares 12/31/2021 85

Required:

73. What is the total salaries expense to reported in relation to the compensation plan in 2019?

74. How much from the salaries expense in 2020 in relation to the compensation plan is attributed to

the liability component?

75. How much from the salaries expense in 2021 in relation to the compensation plan is attribute to

the equity component?

Leslie Corporation has suffered operating losses for some time, but is now operating profitably and

expects to continue to do so. Current and projected income, however, will not be sufficient to eliminate

the deficit in the near term. It also appears that plant assets are overstated considering current prices

and economic conditions. After receiving permission from government authorities and approval from

the shareholders, the board of directors of Leslie Corporation decides to restate the company assets and

paid-in capital balances in order to remove the deficit and make possible the declaration of dividends

from profitable operations. A balance sheet for the company just prior to this action is presented on

the next page:

Leslie Corporation

Balance Sheet

December 31, 2020

Current assets P250,000 Liabilities P300,000

Property, plant and equipment 1,500,000 Ordinary Shares, 10 par,

Accumulated Depreciation (600,000) 100,000 shares 1,000,000

Share premium 100,000

________ Deficit (250,000)

Total assets 1,150,000 Total P1,150,000

Case 1:

Assuming that the quasi reorganization shall be accomplished as follows:

a) Property, plant and equipment are to be reduced to their present fair market value of P800,000.

b) Inventories are to be written down by P50,000.

c) Unaccrued obligation shall be recognized at P150,000.

d) Ordinary Shares are to reduced to a par value of P5.

Requirements:

76. What is the total asset after the quasi-reorganization?

77. What is the total stockholders' equity after the quasi-reorganization?

78. What is the balance of share premium (additional paid in capital) after the quasi-reorganization?

Case 2:

Assuming that the quasi reorganization shall be accomplished as follows:

a) Property, plant and equipment are appraised at a replacement cost of P2,500,000.

b) Inventories are to be written down by P75,000.

c) Unaccrued obligation shall be recognized at P175,000.

Requirements:

79. What is the total asset after the quasi-reorganization?

80. What is the total stockholders' equity after the quasi-reorganization?