X Co. Ltd. has its share capital divided into equity shares of Rs. 10 each. On 1.1.2012 it granted 20,000 employees’ stock option at Rs. 50 per share, when the market price was Rs. 120 per share. The options were to be exercised between 15th March, 2013 and 31st March, 2013. The employees exercised their options for 16,000 shares only and the remaining options lapsed. The company closes its books on 31st March every year. Show Journal entries (with narration) as would © The Institute of Chartered Accountants of India appear in the books of the company up to 31st March, 2013.
answer given in practise manual
15.03.2013
Bank A/c Dr. 8,00,000
Employee compensation expense A/c Dr. 11,20,000
To Equity share capital A/c 1,60,000
To Securities premium A/c 17,60,000
(Being shares issued to the employees against the options vested to them in pursuance of Employee Stock Option Plan)
31.3.13 Profit and Loss A/c Dr. 11,20,000
To Employee compensation expenses A/c 11,20,000
(Being transfer of employee compensation transfer to Profit and Loss Account)
what i want to ask is that why no employee esop expenses should be charged for year ending 31.3.2012
vesting period is more than 1 year and 3 months fall in 11-12 , so expense should be recognized proportionately
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