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

---

Definitions:

Zero Correlation

Zero correlation indicates a lack of any linear relationship between two variables, meaning one variable does not predict the movement of the other.

Positive Correlation

A relationship between two variables where an increase in one variable is associated with an increase in the other variable.

Achievement Tests

Standardized tests designed to assess a person's level of skill, accomplishment, or knowledge in a specific area.

Nurture

The influence of external factors like environment and upbringing on the development and behavior of an individual.