RSM320H1 Chapter Notes - Chapter 16b: Valuation Of Options, Market Price
Document Summary
Two common plans with unique accounting issues: share appreciation rights plans. Affords the right to receive compensation equal to share appreciation: performance-type plans. Sars designed to mitigate the complex process of exercising options and selling the related shares. Employee receives any appreciation in share value: appreciation = market price at exercise date less a pre-established price. Appreciation paid out in cash, shares, or a combination. The total amount of compensation is not known until the exercise date. At the grant date/measurement date, an estimate must be made. Ifrs requires the use of an options pricing model: aspe requires the intrinsic value method. The cost is then allocated over the service period using the percentage approach. Problem occurs when exercise date goes beyond service period: any changes are reported in subsequent periods until rights expire or when exercised, whichever comes first.
