718-20-35-3 A modification of the terms or conditions of an equity award shall be treated as an exchange of the original award for a new award. In substance, the entity repurchases the original instrument by issuing a new instrument of equal or greater value, incurring additional compensation cost for any incremental value. The effects of a modification shall be measured as follows:
? a. Incremental compensation cost shall be measured as the excess, if any, of the fair value of the modified award determined in accordance with the provisions of this
Topic over the fair value of the original award immediately before its terms are modified, measured based on the share price and other pertinent factors at that date. b. Total recognized compensation cost for an equity award shall at least equal the fair value of the award at the grant date unless at the date of the modification the performance or service conditions of the original award are not expected to be satisfied. Thus, the total compensation cost measured at the date of a modification shall be the sum of the following:
?
o 1. The portion of the grant-date fair value of the original award for which the requisite service is expected to be rendered (or has already been rendered) at that date o 2. The incremental cost resulting from the modification.
Calculate total compensation expense: $15 estmated fair value per option
* 1000 options granted
= $15000 the total compensation is allocated to repense over the 4- year service (vesting) period:2012-2015
$15000/4years=$ 3750
Jan 1, 2014
Fair value of modified share option at Jan 1, 2014 $12
Less: fair value of original share at jan 1 2014 $9
Incremental value of original share option at Jan 1. 2014 $3
Fair value at jan 1 2012 $15/4= 3.75 *2= 7.50
The unrecognized balance at januray 1 2014 is 7.50
Incremental value of modified share option $3
Unrecognized compensation cast for original share option 7.50
Total compensation cost to be recognized 10.50
1000*10.50=10500/2=5250

718-20-55-96 because the modified share options are fully vested; any income tax effects from the additional compensation cost are recognized accordingly.
1000*3=3000
recognized on janjury1 2017
ASC 718 20 Compensation—Stock Compensation Equity 5
Under 718-20-55-37
If Entity T determines that no performance condition is probable of achievement (that is, market share growth is expected to be less than 5 percentage points), then no compensation cost is recognized; however, Entity T is required to reassess at each reporting date whether achievement of any performance condition is probable and would begin recognizing compensation cost if and when achievement of the performance condition becomes probable.
No compensation cost would be recognized on dec 31 2013
Paragraph 44 of SFAS 123(R) explains:
Accruals of compensation cost for an award with a performance condition shall be based on the probable25 outcome of that performance condition—compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved.
Whereas most changes in the expected outcome result in a cumulative catch-up adjustment, changes to the requisite service period alone are accounted for prospectively. Other types of changes to the expected outcome include changes in the quantity of instruments to vest and changes in the per-share fair value. Paragraph A68 of SFAS 123(R) makes a broad categorical distinction between types:
The cumulative adjustment equals the difference between the cumulative expense actually recognized and the cumulative expense that would have been recognized had the current expected outcome been present since the service inception date.
The cumulative amount of compensation cost recognized is 3750 and would be reversed and that would reflect the deference between the cumulative expenses recognized and the cumulative expenses that would have been recognized per new outcome .
Whereas most changes in the expected outcome result in a cumulative catch-up adjustment, changes to the requisite service period alone are accounted for prospectively
18000/2=9000 in 2014 and 9000 in 2015

Tbe cumulative compensation cost would be o for 2015 and 2016
SFAS 123(R)
How a change to the initial estimate of the requisite service period is accounted for depends on whether that change would affect the grant-date fair value of the award (including the quantity of instruments) that is to be recognized as compensation. For example, if the quantity of instruments for which the requisite service is expected to be rendered changes because a vesting condition becomes probable of satisfaction or if the grant-date fair value of an instrument changes because another performance or service condition becomes probable of satisfaction (for example, a performance or service condition that affects exercise price becomes probable of satisfaction), the cumulative effect on current and prior periods of those changes in estimates shall be recognized in the period of the change. In contrast, if compensation cost is already being attributed over an initially estimated requisite service period and that initially estimated period changes solely because another market, performance, or service condition becomes the basis for the requisite service period, any unrecognized compensation cost at that date of change shall be recognized prospectively over the revised requisite service period, if any (that is, no cumulative-effect adjustment is recognized). To summarize, changes in actual or estimated outcomes that affect either the grant-date fair value of the instrument awarded or the quantity of instruments for which the requisite service is expected to be rendered (or both) are accounted for using a cumulativeeffect adjustment, and changes in estimated requisite service periods for awards for which compensation cost is already being attributed are accounted for prospectively only over the revised requisite service period
If the performance condition is reassessed and deemed unachievable, previously recognized compensation cost is reversed and further accruals cease—which is tantamount to altering the expected outcome to a distribution of zero shares or increasing the forfeiture rate to 100%. Alternatively, when reassessed, the implicit service period may be redefined to a later or earlier date. The implicit service period must be analyzed in the context of all relevant award terms and conditions to arrive at the requisite service period,
Require a similar treatment for modification and settlement of awards.
ASC 718 requires that awards with graded vesting and performance or market conditions use the graded-vesting attribution approach, but it also permits companies to make an accounting policy election regarding the attribution method for awards with service conditions and graded-vesting features. Companies can make an election to recognize compensation costs for awards containing only service conditions and graded vesting either as if the award was multiple awards (graded-vesting attribution method) or on a straight-line basis for the entire award (straight-line attribution method), regardless of the method used to measure the fair value of the awards, either as a whole or each individual tranche.
IFRS 2, on the other hand, does not provide the straight-line attribution method alternative. Companies should treat each tranche of the award as a separate grant.
This means that each tranche will be separately measured and attributed to expense over the related vesting period.