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Editorial Board on Accounts and Audit
  • ESOP-02

    by Chirag on Monday, December 23, 2019 at 12:09 AM

    Dear Sir, With respect to my earlier asked query titled-- ESOP by Chirag on Wednesday, November 13, 2019 at 11:58 PM, Pls clarify that why Employee Compensation Expense for the First Year was not calculated considering 360 or 370 employees & then REVERSING the employee compensation expense in Year -2 because Employees who were actually present in 2nd year was 340. Pls clarify.. ??

    Replied byEditorial Board Tuesday, January 14, 2020 at 08:02 PM

    Dear Chirag,
    Since the vesting of shares shall happen only after the end of 2 years, the actual number of shares to be vested after 2 years is all that matters. As given in the question, it is already known that only 320 no. of employees shall be able to complete 2 years and hence only these employees shall be eligible for ESOPs. The expense then should be booked for these employees only. It is presumed that the number 320 is known at the beginning. This number is then adjusted for coming close to actual number who shall get ESOPs.

    Booking with higher than estimated number is not justified.

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