The Following Information Relates to Questions
on 1 July 2013

question 1

Multiple Choice

The following information relates to questions
On 1 July 2013 Watson Pty Ltd granted 100 share appreciation rights (SARS) to each of its 50 employees, conditional on the employee not leaving the company in the next three years. The company estimates the fair value of the SARS at the end of each year in which a liability exists as shown in the table below. The intrinsic values of the SARS at the date of exercise at 30 June 2016, 2017 and 2018 are also shown. All SARS held by employees at 30 June 2016 vest.
$\begin{array}{|l|l|l|}\hline \text { Year ended } & \text { Fair value } & \text { Intrinsic value } \\\hline 30 \text { June } 2014 & \$ 14.40 &\\\hline \text { 30 June } 2015 & \$ 15.50 & \\\hline \text { 30 June } 2016 & \$ 18.20 & \$ 15.00 \\\hline 30 \text { June } 2017 & \$ 21.40 & \$ 20.00 \\\hline 30 \text { June } 2018 & & \$ 25.00 \\\hline\end{array}$
By 30 June 2016 nine employees have left and 15 employees have exercised their SARS.
-The amount recognised as an expense for the year ended 30 June 2016 is:

• A) $5987
• B) $22 500
• C) $28 487
• D) $47 320

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Definitions:

Normally Distributed Populations

Populations in which the variables of interest follow a distribution that conforms to the properties of a normal curve, implying a symmetric distribution of data around the mean.

Independent Samples

Two or more groups of data that are collected from separate and unrelated populations, with each group not influencing the others.

Degrees of Freedom

How many separate values or measures could be allocated to a statistical distribution.

Unequal-variances T-test

A statistical test used for comparing the means of two groups that do not have the same variance.