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Accounting for Employee stock option
Accountancy
In these two problems in illustration 5, when the unvested options lapsed they reversed the liability in respect of the 4000shares that had accured till date..but in the other problem they dont do that but just recognise the excess liabilty that is to be made...I cant get the reason behind it, why is there two different treatments? I mean if what is followed in ill5 is to be followed in ill 6 then we should have recognised the entire 910000 as on 31.3.X3 and revesed the ESOS Acc to the extent of 515000 to general reserve isnt it?
Answers (5)
Sahibdeep Singh
Both the treatments are possible and equally valid. You can do it on a net basis in Illustration 5 as well as done in the Illustration 6. Only a net entry of transfer to General Reserve will then be passed in Illustration 5.
The profit and loss for the period will be different if the Emp. Compensation expense is higher right sir?
Thread Starter
Venkatesh RathinamThe profit and loss for the period will be different if the Emp. Compensation expense is higher right sir?
Yes, it will be different, in that case
Sahibdeep Singh
Yes, it will be different, in that case
Sir the question is, will it be okay to do in any way if one will show an increased level of progit compared to the other method ð?¤?
Thread Starter
Venkatesh RathinamSir the question is, will it be okay to do in any way if one will show an increased level of progit compared to the other method ð?¤?
Yes. Prefer net basis as all other illustrations than 5, does it.
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