On 1 July 2014 Luca Ltd Grants 200 Options to Each

question 5

Multiple Choice

On 1 July 2014 Luca Ltd grants 200 options to each of its 75 employees conditional on the employee remaining in service over the next two years. The fair value of each option is estimated to be $7. Luca estimates that 8 employees will leave over the two year vesting period. By 30 June 2015 four employees have left and the entity estimates that a further five employees will leave over the next year.
On 30 June 2015 Luca decided to reprice its share options, due to a fall in its share price over the last 12 months. The repriced share options will vest on 30 June 2016. At the date of repricing Luca estimates that the fair value of each original option is $1.50 and the fair value of each repriced option is $3.
During the year ended 30 June 2016 four employees left.
The remuneration expense for the year ended 30 June 2015 is:

• A) $34 650
• B) $35 175
• C) $46 200
• D) $46 900

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Definitions:

High Fixed Costs

Costs that remain constant regardless of the level of production or sales in a business, such as rent, salaries, or equipment leases.

Low Variable Costs

A situation where costs that vary with the level of production or service delivery are kept minimal.

Process-Oriented Facilities

Facilities designed around the specific processes and activities involved in production, often tailored to handling a variety of product types or flexible manufacturing.

Utilization

The extent to which a resource, such as equipment, space, or labor, is being used effectively and efficiently.