Pastner Brands Is a Calendar-Year Firm with Operations in Several

question 44

Essay

Pastner Brands is a calendar-year firm with operations in several countries.As part of its executive compensation plan,at January 1,2016,the company had issued 20 million executive stock options permitting executives to buy 20 million shares of stock for $25.The vesting schedule is 20% the first year,30% the second year,and 50% the third year (graded-vesting).The fair value of the options is estimated as follows:
Required:
Determine the compensation expense related to the options to be recorded each year for 2016-2018,assuming Pastner prepares its financial statements in accordance with International Financial Reporting Standards (IFRS).

---

Definitions:

Work In Process

An inventory category that refers to partially completed goods that are still in production.

FIFO Method

"First In, First Out" method, an inventory costing technique that assumes the first items added to inventory are the first ones sold.

Beginning Inventory

The value of all the inventory held by a business at the start of an accounting period.

Equivalent Units

A concept in cost accounting used to express the amount of work done on incomplete units in terms of fully completed units.