Ia6 Questions Ifrs

Q8.7 - ACCOUNTING FOR CASH-SETTLED SHARE-BASED PAYMENT TRANSACTIONS

 Abernethy Ltd grants 1000 share appreciation rights (SARs) to 10 senior managers, to be taken in cash within 2 years of vesting date on condition that the managers do not leave in the next 3 years. The SARs vest at the end of year 3. Abernethy Ltd estimates the fair value of the SARs at the end of each year in which a liability exists as shown below. The intrinsic value of the SARs at the date of exercise at the end of year 3 is also shown.

Year | Fair value | Intrinsic value | Number of managers who exercised their SARs |

1 | $ 4.40 | | |

2 | $ 5.50 | | |

3 | $10.20 | $9.00 | 4 |

During year 1, one employee leaves and Abernethy Ltd estimates that a further two will leave before the end of year 3. One employee leaves during year 2 and the corporation estimates that another employee will depart during year 3. One employee leaves during year 3. At the end of year 3, four employees exercise their SARs.

Required

Prepare a schedule setting out the expense and liability that Abernethy Ltd must recognise at the end of each of the first 3 years.

Q10.4 - ACCOUNTING FOR DEFINED CONTRIBUTION PENSION PLANS

Southern Inc. provides a defined contribution pension fund for its employees. The company pays contributions equivalent to 10% of annual wages and salaries. Contributions of $50 000 per month were paid for the year ended 31 December 2016. Actual wages and salaries were $7 million. Three months after the reporting period, there is a settlement of the difference between the amount paid and the annual amount payable determined with reference to Southern Inc.'s audited payroll information. The settlement at 31 March involves either an additional contribution payment by Southern Inc. or a refund of excess contributions paid.

Required

Prepare all journal entries required during 2016 for Southern Inc.'s payment of, and liability for, pension plan contributions.

Q10.10 - ACCOUNTING FOR...