The Following Information Relates to Questions
on 1 July 2013

question 9

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 liability recorded at 30 June 2015 is:

• A) $19 680
• B) $21 653
• C) $41 333
• D) $47 320

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Definitions:

Original Data Set

The initial collection of data or observations before any processing or analysis has been conducted.

Trimmed Mean

A measure of central tendency calculated by removing a certain percentage of the smallest and largest values from a data set before calculating the mean of the remaining data.

Bootstrap Confidence Interval

A method for estimating the uncertainty of a statistic by resampling the original data and calculating the statistic across these samples to form an interval.

Bootstrap Standard Error

A method for estimating the standard error of a statistic by resampling with replacement from the original dataset and computing the statistic over many resamples.