ESOPs means, equity stok option plans. This is one of the component which creates an exorbitant CTC value for the HR team of a company to market, saying company is giving 2-3 crores worth of package. ESOPs other than being used by the HR guys, actually doles out ownership to its employees and gives them a sense of belonging with a stake. This will obviously, lead to improvement in their productivity because now they work for themselves rather than others, even though with the minuscule amount of shares they are far from ownership but simpletons will still work harder than ever before to get it. Now, if you dole it out easy the value will be lost and ofcourse you need to get the juice out of your employee before handing them with anything. So after granting the ESOPs at the grant date, they are entrusted with their fair share of slavery stipulation called vesting conditions. Usually, the conditions are based on either service or performance or both. Service conditions means those c...
Compound Financial Liabilties are those instruments which has the features of both financial and equity instruments, thus it needs to be recognised and measured after allocation of the components to its financial and equity component. Financial component is identified by discounting all the expected repayments at the market rate and equity component is the balance portion of the total proceeds. Afterwards, the recognition and measurement is done as per ACM method as explained in earlier blogs related to initial measurement and recognition and subsequent measurement and recognition . In ACM method for financial liabilities, for initial recognition we obtain the fair value which in this case is the PV of all the expected repayments at market rates, then we reduce the transaction cost associated thereto. Subsequently, we recognise it in the carrying value being the amortised cost; amortised at the EIR which will be same as market rates where there is no transa...