71 Grove Tree, Van Heerden, Halfway Gardens, Midrand Tel: +27 11 056 6359 Mobile: +27 84 282 3299 Fax: +27 86 617 9341 Email: ecc@endunamoo.co.za Description Lecture solution examples Course Financial Accounting (FAC4863) Topic Share based payment transactions Date 17 May 2015 LE1: Accounting for BEE transactions Year ended 28 February 2015 BEE equity credential costs (P/L) (800,000*6.85) 5,480,000 Share-based payment reserves (SCE) 5,480,000 Accounting for the shares granted to the community trust Intangible asset - license (SFP) 20,000,000 BEE equity credential costs (P/L) (balancing figure) 4,000,000 Share-based payment reserves (SCE) 24,000,000 Accounting for the shares granted to MEF Amortisation expense (P/L) (20,000,000*2/12*1/8) 416,667 Intangible asset - license (SFP) 416,667 Amortisation of the intangible asset ECC2015 Financial Accounting 1
LE2: Equity settled share-based transaction Year ended 31 December 2011 Employee cost (P/L) (C1) 301,000 Share-based payment reserves (SCE) 301,000 Year ended 31 December 2012 Employee cost (P/L) (C2) 231,000 Share-based payment reserves (SCE) 231,000 Employee cost (P/L) (C3) 203,000 Share-based payment reserves (SCE) 203,000 Bank (SFP) (22*1,000*50) 1,100,000 Share-based payment reserves (SCE) (C3) 735,000 Ordinary share capital (SCE) (balancing figure) 1,835,000 Exercise of share options (assuming 100% of the options exercised) Workings C1: Year ended 31 December 2011 (1,000*(50-3-4)*21*1/3) 301,000 FV of share option that takes into account only the market condition Share-based payment expense 301,000 C2: Year ended 31 December 2012 (1,000*38*21*2/3) 532,000 Share-based payment expense (532,000-301,000) 231,000 C3: (1,000*35*21*3/3) 735,000 Share-based payment expense (735,000-532,000) 203,000 ECC2015 Financial Accounting 2
LE3: Equity settled share-based transaction (with a modification) Fair value of the share options before modification 20 Fair value of the share options after modification 25 Additional value to the employees 5 LE1 journal entries will not be affected other the final entry relating to the exercise of the share options Year ended 31 December 2012 Employee cost (P/L) (5*1,000*38*6/18) 63,333 Share-based payment reserves (SCE) 63,333 Accounting for the modification Employee cost (P/L) (5*1,000*35*18/18-63,333) 111,667 Share-based payment reserves (SCE) 111,667 Accounting for the modification Bank (SFP) (35*1,000*20) 700,000 Share-based payment reserves (SCE) (735,000 (LE1)+63,333+111,667) 910,000 Ordinary share capital (SCE) (balancing figure) 1,610,000 Exercise of share options (assuming 100% of the options exercised) ECC2015 Financial Accounting 3
LE4: Cash settled share-based transaction Year ended 31 December 2011 Employee cost (P/L) (C1) 900,000 Cash-settled share-based liability (SFP) 900,000 Year ended 31 December 2012 Employee cost (P/L) (C2) 918,667 Cash-settled share-based liability (SFP) 918,667 Employee cost (P/L) (C3) 2,081,333 Cash-settled share-based liability (SFP) 2,081,333 Cash-settled share-based liability (SFP) 3,900,000 Bank (SFP) 3,900,000 The share-based payment transaction settled Workings C1: Year ended 31 December 2011 (1,000*(100-40)*45*1/3) 900,000 Share-based payment expense 900,000 C2: Year ended 31 December 2012 (1,000*(100-8-12-18)*44*2/3) 1,818,667 Share-based payment expense (1,818,667-900,000) 918,667 C3: (1,000*(100-35)*60*3/3) 3,900,000 Share-based payment expense (3,900,000-1,818,667) 2,081,333 ECC2015 Financial Accounting 4
LE5: Share based payment transaction with alternative Fair value of the shares (1,500*40) / (60,000/1,000) 60,000 60 Fair value of the shares - liability component (1,000*50) / (50,000/1,000) (50,000) (50) Fair value of the shares - equity component 10,000 10 Employee cost (P/L) (60*1/2*1,000) 30,000 Cash-settled share-based liability (SFP) 30,000 Employee cost (P/L) (10*1/2*1,000) 5,000 Share-based payment reserves (SCE) 5,000 Year ended 31 December 2014 Employee cost (P/L) (65*2/2*1,000-30,000) 35,000 Cash-settled share-based liability (SFP) 35,000 Employee cost (P/L) (10*2/2*1,000-5,000) 5,000 Share-based payment reserves (SCE) 5,000 ECC2015 Financial Accounting 5
LE6A: Share based payment transaction with alternative (entity with a choice of settlement) Employee cost (P/L) (60*1/2*1,000) 30,000 Cash-settled share-based liability (SFP) 30,000 Year ended 31 December 2014 Employee cost (P/L) (65*2/2*1,000-30,000) 35,000 Cash-settled share-based liability (SFP) 35,000 LE6B: Share based payment transaction with alternative (entity with a choice of settlement) Employee cost (P/L) (40*1/2*1,200*10) 240,000 Share-based payment reserves (SCE) 240,000 Year ended 31 December 2014 Employee cost (P/L) (40*2/2*1,200*10) 240,000 Share-based payment reserves (SCE) 240,000 Employee cost (P/L) (C1) 106,000 Share-based payment reserves (SCE) 106,000 Share-based payment reserves (SCE) 586,000 Ordinary share capital (SCE) 586,000 Issue of shares to the employees C1: IFRS2.43(c) additional expense Fair value of cash alternative (1,000*10*65) 650,000 Fair value of share alternative (1,200*10*63) 756,000 Additional expense 106,000 ECC2015 Financial Accounting 6
LE7A: Share based payment transaction among group entities SA Ltd's separate financial records Employee cost (P/L) 3,720 Contribution from parent (SCE) 3,720 CA Ltd's separate financial records Investment in SA Ltd (SFP) 3,720 Share-based equity reserves (SCE) 3,720 Pro-forma journal entries Contribution from parent (SCE) 3,720 Investment in SA Ltd (SFP) 3,720 at group level Equity settled transaction in terms of IFRS2.43B Opening balance (2012) (120*100*95%*1/3) 3,800 Closing balance (2013) (120*100*94%*2/3) 7,520 Share based expense 3,720 ECC2015 Financial Accounting 7
LE7B: Share based payment transaction among group entities SA Ltd's separate financial records Employee cost (P/L) 3,907 Cash-settled share-based liability (SFP) 3,907 Cash-settled equity settled transaction in terms of IFRS2.43B/C Opening balance (2012) (124*100*95%*1/3) 3,927 Closing balance (2013) (125*100*94%*2/3) 7,833 Share based expense 3,907 ECC2015 Financial Accounting 8