theajojohn

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...

Financial instruments, are initially recognised at the fair value after transaction cost. Subsequently, it is recognised based on the adopted method of measurement (i.e. Amortisation of Cost Method (ACM)., Fair Value through OCI (FVTOCI) or Fair Value through PL).  Generally, ACM is used for subsequent measurement and realisation unless, entity choose to use FVTOCI or FVTPL considering its position on the holding period and expected realisation of gains. In any instance we have to create an Amortisation Table to amortise the initially recognised value. Financial instruments are measured at their amortised balance in ACM method and fair value in FVTOCI or FVTPL. Where any gain or loss arises during revision of balance compared to the amortised balance it is recognised through OCI (i.e. FVTOCI Reserve) in FVTOCI method or through P&L in FVTPL method. The FVTOCI Reserve is classifiable to P&L upon sale of the instrument.  The amortisation of the balance is done based on t...