On 1 January 2018, Tucan grants 500 share options to each of 10 employees. The fair value of each option is assessed as 15. The options vest if a total shareholder return target (a market condition) is met during a two-year service period. During 2018, Tucan recognizes expense of 37,500. At 1 January 2019, Tucan estimates the total shareholder return target will not be met by 31 December 2019. What is the expense that will be shown in the accounts for 2019?
A. 0 for expense in 2019 and 37,500 for cumulative expense
B. 37,500 for expense in 2019 and 75,000 for cumulative expense
C. (75,000) for expense in 2019 and 0 for cumulative expense
C. The expense that will be shown in the accounts for 2019 would be 0, as the options are now considered to have no remaining vesting period due to the total shareholder return target not being met, and thus, no additional expense would be recognized in 2019. The cumulative expense to date, reflecting the expense recognized up until the point the market condition was determined unattainable, would still be 37,500.
