Prepare the journal entries to record these events

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Question - On 1 July 2019, Arthur Ltd grants 800 share application rights (SARs) to each of its 500 employees, conditional upon the employees remaining in service for the next two years. The SAR scheme entitles each employee to a payment in cash equal to the application in Arthur's share price over the two-year period. At the grant date, it is expected that 80% of employees will still be in service on the vesting date. This estimate remains unchanged at 30 June 2020. The number of employees in service on 30 June 2021 is 350.

Arthur Ltd estimates the fair value of the SARs at the end of the each year in which a liability exists as follows: $14 (30 June 2020); and $16 (30 June 2021). The full liability was settled on 30 June 2021.

Required - Prepare the journal entries to record these events for years ending 30 June 2020 and 30 June 2021?

Reference no: EM132819624

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