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How is the employee compensation expense amortised in year 1,2,3 in this sum ?? How to find that fraction ??

Answers (2)

In this problem we have been changing vesting period since the target of earning is not met until third year In the year 1 - As the earnings are not achieved, we assume the vesting will happen the next year hence it is divided in the ratio of 1/2 In the year 2 - As the earnings are still not achieved, we assume the vesting might happen in the third year, hence at the end of year 2 we divide it in the ration of 2/3 In the year 3 - Finally earnings are achieved, hence we divide it in the ratio of 3/3