05 Jun Question 1. How much compensation cost sho
Question
1. How much compensation cost should OMS recognize in each year of the award’s service period?
2. How would the accounting for these awards change if the modification to the terms (i.e., exercise price) of the award was made on January 1, 2017, after the awards have become fully vested?
3. How would the Year 2 accounting change if management determined that the performance condition was improbable of achievement on December 31, 2013? What would be the cumulative amount of compensation cost recognized?
4. How much compensation cost would management recognize in Year 3 and Year 4 if the December 31, 2014, modification resulted in the awards becoming probable of achievement?
4a. How would the accounting for this modification differ under IFRSs?
Additional Case Facts:
Assume the same facts as described above. However, contemporaneously with the December 31, 2014, modification, OMS will lose a major tenant to bankruptcy; this loss will have a detrimental effect on the Company’s financial results for the year ended December 31, 2014. Even though OMS modified the options to reduce the performance target, loss of the significant tenant prompts OMS to maintain that the achievement of the performance target is improbable (i.e., the options are not expected to vest under the original or modified terms).
Required:
5. If the awards continued to be improbable of achievement after modification, how much cumulative compensation cost would be recognized through December 31, 2015? December 31, 2016?
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