Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Textbook Question
Chapter 19, Problem 19.4Q
When accounting for employee stock options, will a reduction of compensation expense or compensation “income” occur in future periods?
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A stock option plan may or may not be intended to compensate employees for their work. The compensation expense for compensatory stock option plans should be recognized in the periods the a. employees become eligible to exercise the options. b. employees perform services. c. stock is issued. d. options are granted.
Which of the following is NOT a characteristic of a non-compensatory employee stock option plan (ESOP)?
a.
The plan requires the employee to pay an upfront premium.
b.
There is only a small discount from the market price.
c.
The plan is generally available to all employees.
d.
The plan is accounted for as compensation expense.
Clear my choice
How much should be reclassified to Retained Earnings as a result of derecognizing the investment in 2019?
Chapter 19 Solutions
Intermediate Accounting
Ch. 19 - What is the allocation period used to expense...Ch. 19 - How do companies account for stock-based...Ch. 19 - Do companies with equity-based compensation plans...Ch. 19 - When accounting for employee stock options, will a...Ch. 19 - Prob. 19.5QCh. 19 - Prob. 19.6QCh. 19 - Prob. 19.7QCh. 19 - Prob. 19.8QCh. 19 - Prob. 19.9QCh. 19 - Prob. 19.10Q
Ch. 19 - Prob. 19.1MCCh. 19 - Prob. 19.2MCCh. 19 - Prob. 19.3MCCh. 19 - Prob. 19.4MCCh. 19 - Prob. 19.5MCCh. 19 - Prob. 19.6MCCh. 19 - Prob. 19.7MCCh. 19 - Prob. 19.8MCCh. 19 - Prob. 19.1BECh. 19 - Prob. 19.2BECh. 19 - Prob. 19.3BECh. 19 - Prob. 19.4BECh. 19 - Prob. 19.5BECh. 19 - Prob. 19.6BECh. 19 - Employee Stock Options, Liability-Classified...Ch. 19 - Prob. 19.8BECh. 19 - Prob. 19.9BECh. 19 - Prob. 19.10BECh. 19 - Prob. 19.11BECh. 19 - Prob. 19.12BECh. 19 - Prob. 19.13BECh. 19 - Prob. 19.14BECh. 19 - Prob. 19.15BECh. 19 - Prob. 19.16BECh. 19 - Prob. 19.17BECh. 19 - Prob. 19.18BECh. 19 - Prob. 19.19BECh. 19 - Prob. 19.20BECh. 19 - Prob. 19.21BECh. 19 - Prob. 19.22BECh. 19 - Prob. 19.23BECh. 19 - Prob. 19.24BECh. 19 - Prob. 19.25BECh. 19 - Prob. 19.26BECh. 19 - Prob. 19.27BECh. 19 - Prob. 19.28BECh. 19 - Prob. 19.1ECh. 19 - Prob. 19.2ECh. 19 - Employee Stock Options. Equity-Classified Awards....Ch. 19 - Prob. 19.4ECh. 19 - Prob. 19.5ECh. 19 - Prob. 19.6ECh. 19 - Prob. 19.7ECh. 19 - Prob. 19.8ECh. 19 - Prob. 19.9ECh. 19 - Prob. 19.10ECh. 19 - Prob. 19.11ECh. 19 - Prob. 19.12ECh. 19 - Prob. 19.13ECh. 19 - Prob. 19.14ECh. 19 - Prob. 19.15ECh. 19 - Prob. 19.16ECh. 19 - Prob. 19.1PCh. 19 - Prob. 19.2PCh. 19 - Prob. 19.3PCh. 19 - Prob. 19.4PCh. 19 - Prob. 19.5PCh. 19 - Prob. 19.6PCh. 19 - Prob. 19.7PCh. 19 - Prob. 19.8PCh. 19 - Prob. 19.9PCh. 19 - Prob. 19.10PCh. 19 - Prob. 19.11PCh. 19 - Prob. 19.12PCh. 19 - Prob. 1JCCh. 19 - Prob. 2FSCCh. 19 - Prob. 1SSCCh. 19 - Prob. 2SSCCh. 19 - Basis for Conclusions Case 1: Are Employee Stock...Ch. 19 - Prob. 2BCC
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Explain how “at-the-money” stock options (i.e., options that have no intrinsic value) which are part of an executive compensation package results in compensation expense.arrow_forwardCompensatory stock option plans are a common component of employee compensation packages, allowing employees to purchase company stock at a predetermined price. The financial accounting for such plans involves various considerations. Let's examine a set of statements related to compensatory stock option plans and identify which statement does not accurately reflect the financial accounting principles associated with these plans. Question: Which of the following statements regarding the financial accounting for compensatory stock option plans is not accurate? Multiple Choice A) Stock options' fair value is recognized as compensation expense over the vesting period. B) The common stock issued upon the exercise of stock options is recorded at its fair market value. C) Changes in the market value of stock options during the vesting period do not impact the recorded compensation expense. D) The par value of common stock issued upon the conversion of options increases total owners' equity.arrow_forward4. Why do companies give stock-based compensation (e.g. stock options) to employee? Please describe some examples of stock- based compensations.arrow_forward
- What is the net adjustment to retained earnings on the disposal of Security A? What amount in OCI should be recognized in the statement of changes in equity on December 31,2020?arrow_forwardWhat rate of return can stockholders expect to receive on retained earnings?arrow_forwardAccording to IFRS, once the total compensation is measured at the date of grant A. It can be changed in future periods related to a change in market conditions B. It can be changed to reflect the rise or fall in the market price of the company's ordinary shares C. A company is permitted to adjust tge number of share options expected to the actual number of instruments vested D. All of the choices are correctarrow_forward
- Define stock option compensation planarrow_forwardHow is it possible for an employee stock option to be valuable even if the firms stock price fails to meet shareholders expectations?arrow_forwardA discount given to employees for the purchase of shares is recognized as a/n ____________ compensation. liability-settled cash-settled asset-settled equity-settledarrow_forward
- An increase in OCI related to plan assets occurs when: Select one: a. The accumulated benefit obligation is more than expected. b. The vested benefit obligation is less than expected. c. Retiree benefits paid out are less than expected. d. The return on plan assets is higher than expected. e. The employer contributes an amount greater than it was liable to do.arrow_forwardIn a share-based payment with cash and share alternatives, the net effect to the shareholders’ equity if the employee chooses the share alternative is A.the total subscription price B.the balance of the share options outstanding C.the balance of the accrued salaries payable D.zeroarrow_forwardInvestments in equity securities are adjusted to fair value at the end of the period. This adjustment will affect the income statement, statement of comprehensive income, statement of retained earnings and the balance sheet. (True/False) In accounting for pension plans, the projected benefit obligation, service cost and pension plan assets are all valued at present value. (True/False)arrow_forward
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