Document ID: chunk:federal_register_of_legislation:F2022C00493:reg:4:p2
Version: federal_register_of_legislation:F2022C00493
Segment Type: reg
Provision Reference: reg 4 (pt 2/2)
Character Range: 290912–292648

price is CU50 per share. At the end of years 1, 2 and 3, the share price is CU52, CU55 and CU60 respectively. The entity does not expect to pay dividends in the next three years. After taking into account the effects of the post-vesting transfer restrictions, the entity estimates that the grant date fair value of the share alternative is CU48 per share.
At the end of year 3, the employee chooses:
Scenario 1: The cash alternative
Scenario 2: The equity alternative
Application of requirements
The fair value of the equity alternative is CU57,600 (1,200 shares × CU48). The fair value of the cash alternative is CU50,000 (1,000 phantom shares × CU50). Therefore, the fair value of the equity component of the compound instrument is CU7,600 (CU57,600 – CU50,000).
The entity recognises the following amounts:
Year                                                                                                                                                                                                                                                                                                                                                                                                                                      Expense  Equity  Liability
                                                                                                                                                                                                                                                                                                                                                                                                                                                   CU                 CU               CU