Accounting Entries for ESOP over Vesting Period

Scenario :

On 1 January 20X5, Flipkart Ltd. granted 300 employees 1,000 share options each under an equity-settled share-based payment scheme.

The options will vest on 31 December 20X7 provided the employees remain in service until that date.

The fair value of each share option at the grant date (1 January 20X5) was ₹10 per option.

Additional information:

• By 31 December 20X5, 20 employees had left the company and it was estimated that a further 40 employees would leave before the vesting date.
• During 20X6, another 15 employees left. At 31 December 20X6, it was estimated that another 20 employees would leave before the vesting date.
• During 20X7, 18 employees left.

Total P&L Impact – Rs 24,70,000

Balance sheet (Share Option Reserve) – Rs 24,70,000