Reference no: EM133184732
Question - On January 1, 2020, Marshall Company issued to its chief executive officer share options for the purchase of the company's ordinary share (par value, P10) at a strike price of P50. The options are exercisable, beginning January 1, 2023 and expire on December 31, 2024. The options may be exercised only if the officer is still in the employ of the company at the date of exercise. The share options are valued at P30 per share on January 1, 2020 based on the option pricing model used by the company.
The number of share options granted will be based on the following level of sales for the year 2022:
Level of Sales Number of share options
Below P30,000,000 Nil
P30,000,000 - P50,000,000 10,000 share options
P50,000,001 - P70,000,000 15,000 share options
Over P70,000,000 18,000 share options
Estimates of sales for 2022 were as follows:
Estimate made at 2022 estimated sales
January 1, 2020 P35,000,000
December 31, 2020 52,000,000
December 31, 2021 70,000,000
Actual sales for 2022 were P75,000,000. All share options were exercised on January 1, 2023.
Required -
1. How much is the compensation expense for 2021?
2. How much is the compensation expense for 2022?