2. On 1 January Year 1, Company E enters into an agreement with Company C under which C renders consulting services to E on a specific project. C will receive a payment of 100,000 shares of E if the project is completed by the end of Year 2. C provides the services throughout Year 1 and Year 2. E considers that the fair value of this service cannot be measured reliably and therefore measures the services received indirectly. Historically, the market price of E’s shares has been relatively stable. At each reporting date, E analyses the share price movements and concludes that they have not changed significantly. E therefore applies the approximation technique to determine the average share price at regular intervals over the life of the project. A six-month interval is used in this case. The average share price is as follows. 1st half Year 1 11 2nd half Year 113 1st half Year 2 11 2nd half Year 210 E expects the performance condition to be met, which it ultimately is.
