ABC Co. Grants share-based compensation to each of its 200 employees. ABC Co. will pay 200 shares or the cash equivalent to the value of 200 shares to any employee who satisfies the 3-year service condition. The fair value of the share at the grant date is $18. The fair values of the shares and the employees whose interest is expected to vest at each reporting date are as follows:
Required:
Expected shares to be vested:
Year 1: 80%
Year 2: 90%
Year 3: 100 employees
Fair value of equity instrument:
Year 1: $17
Year 2: $16
Year 3: $15
Calculate the liability for each of Year 1, 2 & 3 respectively and show the accounting entries for final settlement assuming the final settlement is in cash?
