On January 1, 2019, BB Company granted 100 share options each to 500 employees, conditional upon

the employees remaining in the entity’s employ during the vesting period.
The share options vest at the end of a three-year period. On grant date, each share option has a fair
value of P30.
The par value per share is P100 and the option price is P120.
On December 31, 2020, 30 employees have left and it is expected that on the basis on the weighted
average probability, a further 30 employees will leave before the end of the three- year period.
On December 31, 2020, only 20 employees actually left and all of the share options are exercised on
such date.
1. What is the compensation expense for 2019?
a. 750,000 c. 250,000
b. 500,000 d. 400,000
2. What is the compensation expense for 2020?
a. 880,000 c. 440,000
b. 380,000 d. 300,000
3. What is the compensation expense for 2021?
a. 500,000 c. 380,000
b. 880,000 d. 470,000
4. What is the share premium upon exercise of the share option on December 31, 2021?
a. 1,370,000 c. 1,350,000
b. 2,250,000 d. 1,350,000
5. CC granted 30,000 share appreciation rights which entitled key employees to receive cash equal
to the difference between P20 and the market price of the share on the date each right is
exercised.
The service period is 2018 through 2020, and the rights are exercisable in 2021. The market price
of the share was P25 and P28 on December 31, 2018 and 2019, respectively.
What is the liability under the share appreciation right on December 31, 2019?
a. 0 c. 160,000
b. 130,000 d. 140,000
6. What is the compensation expense or 2019P
a. 120,000 c. 110,000
b. 150,000
On January 1, 2018, DD granted 100 share appreciation rights to each of the 500 employees on
condition that the employees remain in its employ for the next three years. The employees exercised
their share appreciation rights as follows:
December 31, 2020 100 employees
December 31, 2021 250 employees
December 31, 2022 150 employees
The fair value and intrinsic value of the share appreciable right are
Fv intrinsic value
12/31/18 15
12/31/21 18
12/31/2020 20 15
12/31/2021 21 20
12/31/22 25
The intrinsic value of the share appreciation right on the date of the exercise is the amount paid out of
employees.
7. What is the compensation expense for 2018?
a. 250,000
b. 750,000
c. 500,000
d. 375,000
8. What is the compensation expense for 2019
a. 600,000 c. 900,000
b. 350,000 d. 450,000

On January 1, 2018, DD Company offered the top management share appreciation rights with the ff.
terms:
Predetermined price P100 per share
Number of shares 50,000 shares
Service period 3 years
Exercise date January 1, 2021

The share appreciation rights are exercised on January 1, 2021.

The quoted prices per share are 100, 124, 151 and 151 on January 1, 2018, December 31, 2018,
December 31, 2019, and December 31, 2020, respectively..

9. What is the compensation expense for 2019?

a. 1,200,000 b. 1,300,000 c. 2,550,000 d. 2,150,000

10. What is the compensation expense for 2020?

a. 2,550,000 b. 1,300,000 c. 850,000 d. 0