Current GAAP recommends that the fair value method be used to account for compensatorystock option plans. From a conceptual point of view, this method is an improvement over theintrinsic value method.Required:Explain how the fair value method is an improvement over the intrinsic value method.

The answer for the theory question on the Fair value method to account for the Compensatory stock…

Answered: Current GAAP recommends that the fair…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 3CIC

See similar textbooks

Similar questions

Explain the fair value option.
Which are the assumptions will be added as we discuss the various approaches to the valuation of the REIT?
According to the fair value principle, assets and liabilities should be reported Select answer from the options below 1.at their fair market value. 2.at their historical cost. 3.at a value agreed upon by interested parties. 4.at cost plus inflation.
1.What are the main arguments against the old definition (i.e. the one presented in Appendix A of AASB 3) of fair value? 2.What is the new definition of fair value? Explain the key parts to this definition. 3.Why has the IASB chosen to use exit price as the primary measure of fair value? 4.The existence of a market is very important to determining fair value. What factors would indicate an appropriate market exists?
Describe the accounting for the fair value option.
What reinvestment rate assumptions are built into the NPV, IRR, and MIRR methods? Givean explanation for your answer.
Under IFRS, how are investment properties subsequently measured? a) The cost model must be used. b) The cost or fair value models may be used. c) The cost or revaluation models may be used. d) The fair value model must be used.
identify the assumptions underlying the interest coverage ratio appropriate measure for analyzing long-term solvency risk? Alternatively, can you identify the assumptions underlying the interest coverage ratio appropriate measure for analyzing short-term solvency risk?
Fair value is determined as: Select one: a. The current entry price. b. The current exit price. c. A future exit price. d. A future entry price.
Required: a. if arturito will accept the special order, what is the incrementak benefit(loss)?
In conducting an incremental B/C analysis of this data:a. the DN alternative is not an optionb. the DN alternative is an optionc. there is not enough information given to know if DN is an option or notd. DN is an option only if the alternatives are mutually exclusive
What are your views on dedollarization?

SEE MORE QUESTIONS

Recommended textbooks for you

Financial Reporting, Financial Statement Analysis…

Finance

ISBN:

9781285190907

Author:

James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Auditing: A Risk Based-Approach to Conducting a Q…

Accounting

ISBN:

9781305080577

Author:

Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:

South-Western College Pub

Financial Reporting, Financial Statement Analysis…

Finance

ISBN:

9781285190907

Author:

James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Auditing: A Risk Based-Approach to Conducting a Q…

Accounting

ISBN:

9781305080577

Author:

Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:

South-Western College Pub

SEE MORE TEXTBOOKS

Current GAAP recommends that the fair value method be used to account for compensatory stock option plans. From a conceptual point of view, this method is an improvement over the intrinsic value method. Required: Explain how the fair value method is an improvement over the intrinsic value method.