becker cma

Limited Period Offer Avail 20% discount in all subjects CA,CS and CMA,Coupon- OFFER20 Call: 088803-20003

CA Final Online Classes
Prodamy

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Esop guidance note

This query is : Resolved 

The Holding company has given to the subsidiary company employees, an option to subscribe to it's shares by way of either:-

a) Outright Purchase
b) Cash Settlement of differences in prices.

The employees are also liable to pay an option premium for the same.

How do we account for this in the subsidiary company's books(Ind Co), as this instance hasn't been covered by the Guidance note issued by the institute.

Barring the premium collection entries, should this be accounted having the Guidance Note as base?

Thank you
Sanath

a) outright purchase option to be accounted as per Equity Settled Scheme accounting principles.

b) Cash Settlement should be accounted as Cash Settled scheme and revalued at every balance sheet date.

However, the cash settlement is only a mechanism to facilitate the cash payment where the shares are issued by the company to a trust and trust sells the shares and gives net cash to employee, then this will still be considered as an equity settled scheme and accounted accordingly.



You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now


Similar Resolved Queries






Trending Tags