TMI BlogAccounting Policies for ESOSX X X X Extracts X X X X X X X X Extracts X X X X ..... [(c) Where the accounting value is accounted for as employee compensation in accordance with clause (b), the amount shall be amortised as under : (i) Where the scheme does not provide for graded vesting, the amount shall be amortised on a straight-line basis over the vesting period. (ii) Where the scheme provides for graded vesting - (1) the vesting period shall be determined separately for each separate vesting portion of the option, as if the option was, in substance, multiple option and the amount of employee compensation cost shall be accounted for and amortised accordingly on a straight-line basis over the vesting period; or (2) the amount of employee compensation cost shall be accounted for and amortised on a straight- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the exercise period. The accounting value of the option being: 500 x (160-40) = 500 x 120 = 60,000 The accounting entries would be as follows: 1/4/1999 Deferred Employee Compensation 60000 Expense Employee Stock Options Outstanding 60000 (Grant of 500 options at a discount of ₹ 120 each) 31/3/2000 Employee Compensation Expense 24000 Deferred Employee Compensation Expense 24000 (Amortisation of the deferred compensation over two and a half years on straight-line basis) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/10/2002 Employee Stock Options Outstanding 6000 Employee Compensation Expense 6000 (Reversal of compensation accounting on lapse of 50 vested options at the end of exercise period) The T-Accounts for Employee Stock Options Outstanding and Deferred Employee Compensation Expense would be as follows: Employee Stock Options Outstanding Account Date Particulars Amount (Rs.) Date Particulars Amount (Rs.) 1/5/2001 Employee Compensation/ Deferred C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60000 Employee Stock Options Outstanding will appear in the Balance Sheet as part of Net Worth or Shareholders' Equity. Deferred Employee Compensation will appear in the Balance Sheet as a negative item as part of Net Worth or Shareholders' Equity. ********* [1] Substituted vide circular no. SEBI/PMD/MBD/ESOP/2/2003/30/06 dated June 30, 2003, w. e. f. June 30, 2003. Prior to its substitution, Schedule I (b) read as under: (b) The accounting value of options shall be equal to the aggregate, over all employee stock options granted during the accounting period, of the fair value of the option. For this purpose: 1. Fair value means the option discount or, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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