Facts
Playful has ordered an amount of inventory from a supplier on July 1, 20X5. The supplier has said that the goods will be shipped and delivered on September 1, 20X5. The goods were actually received on September 30, 20X5. The supplier has agreed to accept 2,000 shares in Playful as payment for the inventory.
Playful has received an invoice for $50,000. This invoice is only for accounting purposes as the fair value of the goods is difficult to determine because of the highly specialized nature of the inventory.
The shares vest immediately in the supplier as soon as they are received.
The directors of the entity are unsure as to the effect that a movement in the entity’s share price will have on equity settled share based payments.
Prior to the applicable date in IFRS 2, Playful had granted share options to each of its directors. On January 1, 20X6, Playful decided to reprice the options at a new exercise price. Playful has also granted share appreciation rights to the members of a middle management committee.
The share appreciation rights provide these employees with the right to receive cash equal to the appreciation in the entity’s share price since the grant date, which was January 1, 20X6. All of the rights vest on December 31, 20X7, and they can be exercised during 20X8. It is anticipated that 5% of the middle management personnel will leave during the period to December 31, 20X7.
Required
The entity wishes to know what the implications of the above issuance of shares and share options are for the financial statements of Playful and its subsidiary. Ignore the deferred taxation effects.