M2 Ltd. is a company and has an ESOP programme, for the following ESOP related exercise: Date 1st April 2018 10,000 options were granted at ₹ 400 each when market price was ₹ 1,000. Vesting period was three years Maximum

Answer 2(c) Date Particulars Amount (in ₹) Dr. Amount (in ₹) Cr. 1st April 2018 Deferred Employee Compensation Expense A/c Dr. To Employee Stock Options Outstanding A/c (Being grant of 10,000 stock options at a discount of ₹ 600 (1,000 - 400)) 60,00,000 60,00,000 31st March 2019 Employee Compensation Expense A/c Dr. To Deferred Employee Compensation Expense A/c (Being amortization of Deferred Compensation i.e. ₹ 60,00,000/3) 20,00,000 20,00,000 31st March 2020 Employee Compensation Expense A/c Dr. To Deferred Employee Compensation Expense A/c (Being amortization of Deferred Compensation i.e. ₹ 60,00,000/3) 20,00,000 20,00,000 31st March 2021 Employee Stock Options Outstanding A/c Dr. To Employee Compensation Expense A/c (₹ 2,000 * ₹ 600) * 2/3 To Deferred Employee Compensation Expense A/c (Being reversal of 2,000 unvested options lapsed) 12,00,000 8,00,000 4,00,000 31st March 2021 Employee Compensation Expense A/c Dr. To Deferred Employee Compensation Expense A/c (Being amortization of Deferred Compensation i.e 8000 * ₹ 600 / 3) 16,00,000 16,00,000 31st March 2021 Bank A/c (₹ 7,000 * 400) Dr. Employee Stock Options Outstanding A/c Dr. To Share Capital A/c To Securities Premium A/c (Being exercise of 7,000 options at an exercise price of ₹ 400/-) 28,00,000 42,00,000 70,000 69,30,000 31st March 2022 Employee Stock Options Outstanding A/c Dr. To Employee Compensation Expense A/c (Being reversal of lapse of vested options - 1,000 * ₹ 600) 6,00,000 6,00,000