The Following Information Relates to Questions

question 10

Multiple Choice

The following information relates to questions
Viola Ltd has granted each of its 10 senior executives a choice between receiving a cash payment equivalent to 1000 shares or receiving 1200 share. The grant is conditional on the completion of three years’ service with the company. If the share alternative is chosen, the shares must be held for two years after vesting date. At grant date the company’s share price is £25 per share. At the end of years 1, 2 and 3 the share price is £27, £28 and £30 respectively. The company does not expect to pay dividends in the next three years. After taking into account the effect of post-vesting transfer restrictions the company estimates the grant-date fair value of the share alternative is £24 per share.
-What is the fair value of the cash alternative?

• A) £240 000
• B) £250 000
• C) £288 000
• D) £300 000

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Definitions:

Income Statement Columns

The segments within an income statement, separating various components like revenues, expenses, and net income, to display a company's financial performance.

Worksheet

A paper or digital form used by accountants to organize and summarize financial information for a period, aiding in the preparation of financial statements.