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What amount of share premium-ordinary will arise

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Reference no: EM132885949

Question - On January 1, 2020, Hammer Corporation granted to each of its 5 executives the right to choose either 1,000 ordinary shares or to receive cash payment equal to 900 shares. The grant is conditional upon completion of three years of service. The entity estimates that the value of the share alternative on January 1, 2020 is P75 per share.

The company's ordinary share has a par value of P50.

Following are the fair values of the company's ordinary share:

January 1, 2020 80

December 31, 2020 84

December 31, 2021 90

December 31, 2022 95

December 31, 2023 97

Two executives exercised their rights to receive cash settlement on December 31, 2022; the others chose to receive the ordinary shares on December 31, 2023.

Required -

Q1. Amount assigned to equity on January 1, 2020 using the residual approach.

Q2, Amount of compensation expense for 2020 and 2021, and 2022, respectively.

Q3. What amount of cash settlement will the two executives (with 1,800 shares) received as a result of exercising their right to receive cash payment on December 31, 2022 when the share market price is P95 per share?

Q4. What amount of additional compensation expense will be recognized in 2023 as a result of exercising the right to receive ordinary shares by the remaining executives instead of cash?

Q5. What amount of share premium-ordinary will arise from the exercise of the right to receive ordinary shares by the remaining executives instead of cash?

Reference no: EM132885949

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