Answer Happy

At the beginning of year 1, Perusahaan Pemuda Sdn Bhd grants 50
share options
of its 120 employees, conditional on the employees remaining in
the
employment of the company over the next 12 years. The company
estimated
that the fair value of the option on the grant date is $12.
Based on a weighted average probability, Perusahaan Pemuda Sdn
Bhd
estimates that 15% of its employees will leave during the stated
period. It is
observed at the end of the 1 year, eight employees have left, and
the company
estimated that nine will leave during the second year.
By the end of the first year, the company’s share price has
dropped, and it
decides to reprice the share options. Perusahaan Pemuda Sdn Bhd
estimates
that the fair value of the original share options is $7 and the
fair value of the
repriced share options is $10. Nine employees leave during year
2.
Required:
Calculate the respective remuneration expense, relating to the
above, to be
recognized at the end of year 1 and year 2.
(20 marks)