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Editorial Board on Accounts and Audit
  • ESOP expenses division

    by arun on Monday, August 19, 2019 at 07:22 PM

    pvt ltd co ESOP option granted on 15.6.2018 for 50000 shares to 15 employees at Re 1 exercise price, face value per share Re1. Assume fair Value per share Re1. assume all 15 employee will remain for 3 years. VESTING SCHEDULE is at end of 12 month from grant date vesting of 50% share, 25% each at end of 24 month and 36 month respectively. exps 50000 share X fair value Re1 is Rs 50000.QUESTION (1) how to divide in 3 years. (2) can i book exps on 31.3.2019 for 9.5 month.

    Replied byEditorial Board Thursday, August 29, 2019 at 07:55 PM

    In your case, the company should bifurcate the share option into three parts on the basis of vesting period. First part shall contain 25,000 shares, second and third part shall contain 12,500 shares each. The expense in respect of first, second and third part shall be recognised over 12 months, 24 months and 36 months respectively. The following amount shall be recognised as expense for 2018-19:
    First part = (25,000 shares * Rs. 1 * 9.5) / 12 = Rs. 19,791.67
    Second part = (12,500 shares * Rs. 1 * 9.5) / 24 = Rs. 4,947.92
    Third part = (12,500 shares * Rs. 1 * 9.5) / 36 = Rs. 3,298.61

    Total expenses = Rs. 28,038.20

 
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