MINDA issued 11,000 share appreciation rights (SARs) that vest immediately to its employees on 1 st April, 20X0. The SARs will be settled in cash.…

CA Final · Financial Reporting · MTP · May 2026
MINDA issued 11,000 share appreciation rights (SARs) that vest immediately to its employees on 1 st April, 20X0. The SARs will be settled in cash. Using an option pricing model, at that date it is estimated that the fair value of a SAR is 100. SAR can be exercised any time until 31 st March, 20X3. It is expected that out of the total employees, 94% at the end of the period on 31 st March, 20X1, 91% at the end of next year will exercise the option. Finally, when these were vested i.e. at the end of the 3 rd year, only 85% of the total employees exercised the option. Fair value of SAR ₹ 31 st March, 20X1 132 31 st March, 20X2 139 31 st March, 20X3 141 Pass the Journal entries?

Suggested Answer and Working Notes:

Period Fair value To be vested Cumulative Expense Start 100 100% 11,00,000 11,00,000 Period 1 132 94% 13,64,880 2,64,880 Period 2 139 91% 13,91,390 26,510 Period 3 141 85% 13,18,350 (73,040) 13,18,350 Journal Entries 1 st April, 20X0 Employee benefits expenses Dr. 11,00,000 To Share-based payment liability 11,00,000 (Fair value of the SAR recognised) 31 st March, 20X1 Employee benefits expenses Dr. 2,64,880 To Share-based payment liability 2,64,880 (Fair value of the SAR re-measured) 31 st March, 20X2 Employee benefits expenses Dr. 26,510 To Share-based payment liability 26,510 (Fair value of the SAR re-measured) 31 st March, 20X3 Share-based payment liability Dr. 73,040 To Employee benefits expenses 73,040 (Fair value of the SAR reversed) Share-based payment liability Dr. 13,18,350 To Cash 13,18,350 (Settlement of SAR)

Topics: Ind AS 102

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