Financial Accounting 3rd Year (FINANCIALACCOUNTING)
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SHARE BASED PAYMENTS SIMPLIFIED
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Course
Financial Accounting 3rd Year (FINANCIALACCOUNTING)
Institution
University Of The Western Cape (UWC)
IN the notes I have made a detailed breakdown as to what are share-based payments, how do they arise and how do we account for them.
There are different ways to each of these and I further broke down in detail the concepts of each.
In accounting there is always a lot of integration as a resul...
Financial Accounting 3rd Year (FINANCIALACCOUNTING)
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THIS EXAMPLE HAS A FIXED VESTING PERIOD AS A RESULT ONLY THE EMPLOYEES CHANGED
THE YEARS REMAINED THE SAME WHILE EMPLOYEE NUMBERS CHANGED
REMEMBER THIS CALCULATION IS AT YEAR END SO YOU ALWAYS USE YEAR END ESTIMATION FIGURES
VESTING PERIOD CAN BE:
FIXED
VARIABLE
500 TOTAL EMPLOYEE INITIALLY
177 EXERCISED
266 DID NOT EXERCISE
443 IN TOTAL AT END
R15 AS PRICE OF EQUITY
EMPLOYEES @ R10
Bank increases
Equity decreases (SBPR)
Share capital increases (E)
Retained income increases €
The journal for the years before
DR: Employee cost
CR: SBPR
NOTE:
,XED VESTING PERIOD AS A RESULT ONLY THE EMPLOYEES CHANGED
HE SAME WHILE EMPLOYEE NUMBERS CHANGED
LATION IS AT YEAR END SO YOU ALWAYS USE YEAR END ESTIMATION FIGURES
Dr
Dr
Cr
CR
177.000,00
664.500,00
487.500,00
EQUITY
DR
CR
LIABILITIES
DR
CR
THEREFORE
We account for the receipt of the money for the ones to exercised their options
Then we take out all the share based payments due at the end of the vesting period (no consideration of exercise)
We include the amount that has been paid (the bank amount) AND the value of the portion that has been exercised (Pay
We retain the value of the total options not exercised (Payment due* Employees who did not exercise/Total employees
SBPR must remain empty as a result, the share capital and retained income are used to transfer the amount in SBPR
Share capital for those who have exercised the options
Retained income for those who have not exercised their options
YOU DO THIS FOR ALL YEARS VESTING, THE ABOVE JOURNAL IS THE LAST ONE AND IS FOR RECLASSIFICATION
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