Case Share-Based Payment Nexians Corporation awarded fixed options to 100 employees on 1 January 20×4 to acquire 20,000 shares of the company. The fair value of the option was determined to be $1.20 using the Black-Scholes models and the exercise price was $3.50 per share (same as the market price at 1 January 20×4). Other terms of the options are shown as follows: a. The share option expired five years after the date of the grant. b. The employees must remain employed until 31 December 20×6. c. The management estimated a forfeiture rate of 2%. This estimate was revised at the end of each year. d. In 20×4, three employees left the firm and the forfeiture rate was revised to 5% at 31 December 20×4. e. In 20×5, another two employees left the firm and the forfeiture rate was maintained at 5% at 31 December 20×5. f. In 20×6, three employees left the firm. Required: 1. Calculate the remuneration expense relating to the share options for the following years 20×4, 20×5 and 20×6.

Case Share-Based Payment
Nexians Corporation awarded fixed options to 100 employees on 1 January 20×4 to acquire
20,000 shares of the company. The fair value of the option was determined to be $1.20 using
the Black-Scholes models and the exercise price was $3.50 per share (same as the market price
at 1 January 20×4).
Other terms of the options are shown as follows:
a. The share option expired five years after the date of the grant.
b. The employees must remain employed until 31 December 20×6.
c. The management estimated a forfeiture rate of 2%. This estimate was revised at the end
of each year.
d. In 20×4, three employees left the firm and the forfeiture rate was revised to 5% at 31
December 20×4.
e. In 20×5, another two employees left the firm and the forfeiture rate was maintained at
5% at 31 December 20×5.
f. In 20×6, three employees left the firm.

Required:
1. Calculate the remuneration expense relating to the share options for the following years
20×4, 20×5 and 20×6.
2. Prepare the journal entries to record the share-based transactions for the period 20×4
to 20×6.

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