Question

Which of the following statements does not accurately reflect the financial accounting for compensatory stock option...

Which of the following statements does not accurately reflect the financial accounting for compensatory stock option plans?

Multiple Choice

  • Total owners’ equity is increased by the par value of the common stock issued when the options are converted.

  • The paid-in capital stock options account is credited when compensation expense is recorded each year.

  • The compensation expense is not adjusted for changes in the market value of the stock options during the service (vesting) period.

  • Compensation expensed is allocated equally over the service (vesting) period.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Here is My Answer for the above Question:

  • Total owners’ equity is increased by the par value of the common stock issued when the options are converted. this statement is correct

  • The paid-in capital stock options account is credited when compensation expense is recorded each year. this statement is correct

  • The compensation expense is not adjusted for changes in the market value of the stock options during the service (vesting) period. this statement is not correct

  • Compensation expensed is allocated equally over the service (vesting) period. this statement is correct

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2016, sixty executives are offered a fixed compensatory stock option plan in which...
On January 1, 2016, sixty executives are offered a fixed compensatory stock option plan in which each of them will receive options to buy 5,000 shares of $10 par common stock at $30 a share. On the grant date, the fair value per option is $7.50. There is a three-year service period and an estimated annual employee turnover rate of 3%. Required: a.       Compute the expected total compensation cost. Compute the compensation expense for 2016. Prepare the journal entry to...
On Jan 1, 2017, Company A's board of directors approved granting 4,000 stock options to a...
On Jan 1, 2017, Company A's board of directors approved granting 4,000 stock options to a select group of senior employees. The requisite service period is four years with 25% of the options vesting each year from 2017 to 2021. The fair value of the option is as below: Jan 1, 2017 $10 Dec 31, 2017 $15 Dec 31, 2018 $20 Dec 31, 2019 $25 Dec 31, 2020 $30 1) Based on the description in the question, the type of...
On Jan 1, 2017, Company A's board of directors approved granting 4,000 stock options to a...
On Jan 1, 2017, Company A's board of directors approved granting 4,000 stock options to a select group of senior employees. The requisite service period is four years with 25% of the options vesting each year from 2017 to 2021. The fair value of the option is as below: Jan 1, 2017 $10 Dec 31, 2017 $15 Dec 31, 2018 $20 Dec 31, 2019 $25 Dec 31, 2020 $30 1) Based on the description in the question, the type of...
On Jan 1, 2017, Company A's board of directors approved granting 4,000 stock options to a...
On Jan 1, 2017, Company A's board of directors approved granting 4,000 stock options to a select group of senior employees. The requisite service period is four years with 25% of the options vesting each year from 2017 to 2021. The fair value of the option is as below: Jan 1, 2017 $10 Dec 31, 2017 $15 Dec 31, 2018 $20 Dec 31, 2019 $25 Dec 31, 2020 $30 1) Based on the description in the question, the type of...
On Jan 1, 2017, Company A's board of directors approved granting 4,000 stock options to a...
On Jan 1, 2017, Company A's board of directors approved granting 4,000 stock options to a select group of senior employees. The requisite service period is four years with 25% of the options vesting each year from 2017 to 2021. The fair value of the option is as below: Jan 1, 2017 $10 Dec 31, 2017 $15 Dec 31, 2018 $20 Dec 31, 2019 $25 Dec 31, 2020 $30 1) Based on the description in the question, the type of...
In their 2015 10-K report, eBay reported a stock option grant of 2 million options during...
In their 2015 10-K report, eBay reported a stock option grant of 2 million options during the year, the per share fair-value of which was computed as $6.84. If the options have, on average, a four-year vesting period. What expense did the company report in 2015 related to this grant? What will happen to the following accounts when those options are exercised (please circle your answer): Common stock            Increase                Decrease Cash                          Increase                Decrease Basic EPS                  Increase               ...
Nadal Company has 20 executives to whom it grants compensatory share options on January 1, 2016....
Nadal Company has 20 executives to whom it grants compensatory share options on January 1, 2016. At that time, it grants each executive the right to purchase 100 shares of its $5 par common stock at $40 per share after a 3-year service period. The value of each option is estimated to be $11.75 on the grant date. Based on its average employee turnover rate each year, Nadal expects that 2 executives will not vest in the plan. At the...
On November 1, 2017, Sunland Company adopted a stock-option plan that granted options to key executives...
On November 1, 2017, Sunland Company adopted a stock-option plan that granted options to key executives to purchase 21,900 shares of the company’s $9 par value common stock. The options were granted on January 2, 2018, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $50, and the fair value option-pricing model determines the...
On November 1, 2020, Whispering Company adopted a stock-option plan that granted options to key executives...
On November 1, 2020, Whispering Company adopted a stock-option plan that granted options to key executives to purchase 33,900 shares of the company’s $10 par value common stock. The options were granted on January 2, 2021, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $30, and the fair value option-pricing model determines the...
On November 1, 2020, Marin Company adopted a stock-option plan that granted options to key executives...
On November 1, 2020, Marin Company adopted a stock-option plan that granted options to key executives to purchase 33,900 shares of the company’s $9 par value common stock. The options were granted on January 2, 2021, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $30, and the fair value option-pricing model determines the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT