Answer about Accounting 2022

Running head: ACCOUNTING
Accounting
Name of the Student:
Name of the University:
Author’s Note

ACCOUNTING
1
Table of Contents
Answer to Part a.............................................................................................................2
Answer to Part b.............................................................................................................3
Answer to Part d.............................................................................................................6
Share-Based Payments...................................................................................................6
Vesting conditions and cancellation...............................................................................7
IFRS 2............................................................................................................................8
Graded vesting...........................................................................................................8
Shareholder granting..................................................................................................9
Conclusion....................................................................................................................11
Bibliography.................................................................................................................12
Answer to Part a

ACCOUNTING
2
Transaction 1
As per the provisions which are stated in IFRS 2, the fair value of goods or service
provide should be used for valuing the share option unless the same cannot be valued
properly. In this case Agrico Plc offered to share options which were of less value as
compared to goods received by the company. The business is required to account for the
goods received and the same should be done at the fair value of the goods which is received.
Inventory A/c ...............................................Dr $ 10,000,000
To Equity A.c $ 10,000,000
(Being goods received for share based payment recorded)
Transaction 2
For the first year = ( 2000 shares * (500- 40) employees*1/3) * $ 21.74 = 6666919
For the second year = (2000 shares * 460 employees*2/3) * $ 21.74 = 13333859
For the third year = (2000 shares * 460 employees*3/3) * $ 21.74 = 20000800
Total = $ 40,001,600
The treatment of the business is wrong as the Vesting period of the employees is for 3
years and the same needs to be considered as the base for 3 years as the vesting period of the
same period.
The Journal entry for the same would be an increase in the non-current liabilities and a charge
against profits of the business.
Answer to Part b.
Draft statement of profit or loss for the year ended 31 December 2019

ACCOUNTING
3
£m
Draft
£m
adjustments
£m
Revised
Revenue 494 10 504
Cost of sales (360)
(360)
Gross profit 134 144
Administrative expenses (64) +40 (104)
Distribution costs (25) (25)
Operating profit 45 15
Finance costs (6) (6)
Profit before tax 39 9
Income tax expense (8)
Profit for the year 31
9