ACCT 302 Read & Interact Spiceland, Nelson, & Thomas Chapter 19 solutions complete answers

ACCT 302 Read & Interact Spiceland, Nelson, & Thomas Chapter 19 solutions complete answers 

 

Compensation plans that are tied to the achievement of certain targets and are used to motivate key employees are referred to as       compensation plans.

 

Share-based plans that requires that the awardee continue to be employed by the granting company are typically referred to as

 

Total compensation associated with restricted stock awards typically is equal to the shares'

 

When restrictions are lifted on restricted stock units for par value stock, paid-in capital restricted stock is replaced by (Select all that apply.)

 

Which of the following statements regarding the prevalence of stock option awards is correct?

 

Which of the following represent typical goals of executive compensation plans? (Select all that apply.)

 

            plans give employees the choice to purchase a specified number of shares of the firm's stock at a specified price during a specified period of time.

 

Which of the following is correct regarding the nature of restricted stock?

 

Donald Company grants stock options to certain employees. On the date of grant, Donald should measure total compensation based on

 

Falken Company awards 1,000 shares of common stock to Robert Small. The shares are restricted and require that Robert remains with the company for at least 2 more years. The current market price of the shares is $15 per share. Total compensation associated with this restricted stock award is

 

On January 2, 20X1, Utta Corp. (a calendar-year company) grants 10,000 stock options with a 3-year vesting period to employees. On the grant date, the market price of the $1 par value stock is equal to the exercise price of $20 per share. On the date of grant, the estimated value of the options is $6 per option. During 20X4, 9,000 stock options were exercised. Utta Corp. should recognize this event by crediting (Select all that apply.)

 

Marian Company granted restricted stock units for its par value stock to its top executives. When the restriction is lifted, Marian should (Select all that apply.)

 

On January 2, 20X1, Utta Corp. (a calendar-year company) grants 10,000 stock options with a 3-year vesting period to employees. On the grant date, the market price of the $1 par value stock is equal to the exercise price of $20 per share. The estimated value of the options is $6 per option. During 20X4, 9,000 stock options were exercised. In 20X5, the remaining stock options expire. Utta should recognize the expiration by debiting

 

True or false: Stock options have become an integral part of most medium and large companies.

 

Falcon Company grants stock options to its upper and middle management employees. The options vest over a 4-year period, with 25% exercisable after 1 year, 25% after 2 years, another 25% after 3 years, and the remaining 25% after 4 years. This is an example of

 

Which of the following are facts or conditions that are specifically set forth in stock option plans? (Select all that apply.)

 

Share-based plans typically are grouped into two major categories based on the conditions that must be met by employees in order to receive the benefits of the award. These categories are

 

Compensation relating to stock option grants should be

 

Employee share purchase plans typically allow ______ to purchase company shares at favorable terms.

 

On January 2, 20X1, Utta Corp. (a calendar-year company) grants 10,000 stock options with a 3-year vesting period to employees. On the grant date, the market price of the $1 par value stock is equal to the exercise price of $20 per share. On the date of grant, the estimated value of the options is $6 per option. During 20X4, when the market value of the stock is $30 per share, 9,000 stock options were exercised. Utta Corp. should recognize this event by debiting (Select all that apply.)

 

On January 2, 20X1, Utta Corp. (a calendar-year company) grants 10,000 stock options with a 3-year vesting period to employees. On the grant date, the market price of the $1 par value stock is equal to the exercise price of $20 per share. The estimated value of the options is $6 per option. During 20X4, 9,000 stock options were exercised. In 20X5, the remaining stock options expire. When the options expire, Utta should credit

 

Earnings per share is reported very frequently in the financial press because it

 

Correctly match the type of vesting of stock options with the correct description.

 

Which of the following plans frequently specify a performance condition or a market condition that must be satisfied before employees are allowed the benefits of the reward? (Select all that apply.)

 

Which of the following will qualify a company for having a simple capital structure for the purpose of earnings per share?

 

Plans that permit all employees to buy shares directly from their company at favorable prices are referred to as

 

Pfeffer Company reports net income of $360 million for 20X1; the company's tax rate is 40%. At the beginning of the year, 200,000 common shares were outstanding. On August 1, the company issued an additional 120,000 shares. Weighted-average shares will be

 

Which of the following scenarios will increase total assets and equity?

 

Investors' desire to focus on one number that may summarize a company's performance may explain the importance of

 

Salt Company reports net income of $360 million for 2017; the company's tax rate is 40%. At the beginning of the year, 200 million common shares were outstanding. On July 1, Salt sold an additional 80 million shares and on October 1 distributed a 10% stock dividend. On December 1, the company reacquired 24 million of its outstanding shares. The company's weighted-average shares for the purpose of calculating basic EPS will be

 

For the purpose of deriving EPS, securities are considered dilutive if they are capable of

 

In calculating EPS, preferred stock dividends are subtracted from the numerator because EPS represents earnings available to       shareholders. (Only one word per blank.)

 

At the beginning of the year, Solen Corp. had 100,000 shares of common stock outstanding. On April 1, the company issued an additional 60,000 shares. Weighted-average shares for the year will be

 

Securities that may become common shares in the future are considered

 

Correctly match the cause of issued shares with their effect on assets and shareholders' equity.

 

The treasury stock method takes into account the dilutive effect of stock options and assumes that the proceeds from the exercise of options are used to

 

The method that assumes that a conversion into common stock occurred at the later of the beginning of the period or the time the convertible security is issued is referred to as the ____ method.

 

When a company reacquires its own shares, and weighted-average shares are calculated for the purpose of determining EPS, the reacquired shares that are subtracted from the weighted-average calculation are weighted for the

 

Which of the following statements regarding the role of antidilutive securities in the calculation of EPS is correct?

 

Which of the following are subtracted when determining earnings available to common shareholders?

 

Horst Company has 50,000 stock options outstanding. The option exercise price is $13 per share, the average market price of the stock was $12 per share during the year, and the end-of-year stock price was $14. For the purpose of calculating EPS, these stock options are

 

Which of the following may result in potential common shares? (Select all that apply.)

 

A strategy that simplifies the determination of whether convertible securities are dilutive is to compare their       effect on earnings per share.

 

The way we take into account the dilutive effect of stock options is referred to as the       stock method.

 

The goal of diluted EPS is to report the _____ potential dilution that might result from the conversion or exercise of securities and equity contracts.

 

If convertible bonds are assumed to have been converted, the numerator would be assumed to ____ by the ______ effect of the interest saved.

 

Proceeds under the treasury stock method may include (Select all that apply.)

 

Securities that upon conversion or exercise of potential common shares would increase EPS are referred to as       securities.

 

Vested restricted stock awards are (Select all that apply.)

 

Warrants, options, and rights are antidilutive if the exercise price is

 

Which of the following strategies will simplify the determination of whether convertible securities are dilutive or antidilutive to EPS?

 

Contingent issuable shares may be included in the calculation of

 

Diluted EPS should be the

 

Which of the following potential common shares may be included in the calculation of diluted EPS, but not basic EPS?

 

In calculating diluted EPS under the treasury stock method, one component of the proceeds from the exercise of options include

 

An actual conversion of dilutive convertible securities will (Select all that apply.)

 

Which of the following common or potential common shares must be considered for inclusion in basic EPS?

 

Which of the following must be presented in a company's financial statements (which include the financial statement notes), assuming that the related financial statement items exist for that company? (Select all that apply.)

 

Warrants, options, and rights are dilutive if the exercise price is

 

Which of the following are the essential components of option values? (Select all that apply.)

 

What condition must be met to include contingent issuable shares in the calculation of diluted EPS?

 

The benefit the holder of an option would realize by exercising the options rather than buying the underlying stock directly is referred to as       value.

 

Which of the following shares may be included in the calculation of basic EPS?

 

Match the component of the time value relating to options with its definition.

 

Vogel Corp.'s denominator for calculating diluted EPS is 57,300 weighted-average shares. Included in the denominator were 5,000 shares related to convertible preferred stocks assumed to have been converted. If the convertible preferred stock had actually been converted, the weighted-average shares for purposes of diluted EPS would have been

 

Which of the following factors (each considered independently) will tend to lower the value of stock options? (Select all that apply.)

 

Place the presentation of earnings per share in the correct order.

 

Which of the following can be used to satisfy SARs awards? (Select all that apply.)

 

Option values include the following essential components: a(n)       value and a(n)       value.

 

Fuller Corp. has 10,000 options outstanding that allow employees to purchase each share of stock for $10. The market price of the stock is $14. The intrinsic value of the related options is

 

The two components of the time value relating to options are the

 

Which of the following factors (each considered independently) will tend to increase the value of stock options? (Select all that apply.)

 

Stock appreciation rights may be payable in       or      .

 

Which of the following scenarios will increase stockholders' equity?

 

A 2-for-1 stock split increases outstanding shares by
 
 
A 30% stock dividend increases outstanding shares by
 
 
Accounting for employee share purchase plans is simplified if the plan meets three conditions. One of these conditions requires that the discount on the share purchase price is:
 
 
Accounting for stock option plans consistent with the FASB's recommendation provided two choices for valuing stock options. What were these choices?
 
 
The accounting issues that arise in connection with share-based compensation include determining the ______ value of compensation
 
 
The accounting method for stock options affects reporting of:
 
 
Awards of shares, stock options, and cash payments tied to the market price of shares are common types of share-based _________
 
 
Basic EPS is determined by dividing
 
 
Basic EPS represents the income earned by one share of
 
 
Carter Company issues 100 shares of restricted stock to Berta Miller, who has worked for the company for 5 years. The stock grant requires that Berta remain with the company another 4 years. Compensation expense relating to the value of this restricted stock should be recognized
 
 
Cater Company issues 100 shares of restricted stock to Berta Miller. Which of the following incentives does this stock most likely provide for Berta?
 
 
Compensation associated with restricted stock grants should be amortized over the
 
 
Compensation expense related to share-based awards is recognized regardless of whether the market-related conditions are met because
 
 
Consistent with the revised FASB standard on stock options, the value of stock options
 
 
Deferred compensation associated with restricted stock grants should be reported as a
 
 
During 2017, Weimar Corp. issued a 15% stock dividend. In its 2017 comparative financial statements, the company should present
 
 
During the current year, Smith Corp. distributed a 50% stock dividend. No other changes in the number of outstanding shares occurred during the year. Current year EPS is $3 per share and the prior year reported EPS was also $3. The EPS number reported in the current year comparative financial statements for the prior year should be
 
 
The effect of changes in estimated option forfeitures must be recognized
 
 
Emily wants to calculate basic earnings per share. She has information about the number of shares outstanding at the beginning of the year and the changes in the number shares during the current year. What other information does Emily need? (Select all that apply.)
 
 
Expensing of the value of stock options
 
 
The fair value of stock options is measured when the
 
 
The FASB's 1993 exposure draft on stock options proposed that the estimated value of stock options should be
 
 
For performance-based plans, changes in the estimated probability of meeting the target are recognized in (the) ______ period(s).
 
 
Frohe Inc. sponsors a restricted stock units award plan under which employees can choose to receive either company stock or cash. During the vesting period, the company should recognize the award as a credit to a:
 
 
From an accounting perspective, the significance of the stock option vesting period is that it is the time period
 
 
If all three conditions for simplifying employee share purchase plan accounting are met, the related share purchase:
 
 
If an employee is entitled to receive cash under a restricted stock units award plan, the sponsoring company should recognize:
 
 
 
 
 
 
 
 
 
 

If an employee share purchase plan (ESPP) is considered noncompensatory, how does the company recognize compensation expense for the purchase of the related shares?
 
 
If share-based awards are contingent on the achievement of specific market conditions, compensation expense is
 
 
Initially, recognition of compensation expense for performance-based plans requires that the achievement of the target is
 
 
The journal entry to record unexercised stock options that have been allowed to lapse includes (select all that apply)
 
 
Maggie Company issued options valued at $1 million to one of its executives that are contingent on the company achieving a 10% increase in sales revenue within the next 12 months. The company believes that it is possible that this target will be achieved. After 6 months, the company estimates that it is probable that the target will be achieved. Based on this new estimate, the company must
 
 
match stock option plan with the correct tax treatment: incentive stock option plan
 
 
match stock option plan with the correct tax treatment: nonqualified stock option plan
 
 
Mueller Company estimates that it is unlikely that a particular executive will achieve a specific performance target. Mueller already recognized compensation expense related to this performance plan. Mueller must the _______ related expense.
 
 
Muller Company sponsors a performance-based stock option plan. When the options are granted, Muller should recognize related compensation expense if it is ___________ that the performance target will be met.
 
 
Munster Company issued options to a key executive that are contingent on the company achieving a 10% increase in sales revenue within the next 12 months. The company believes that it is likely that this target will be achieved and accrues $5 million in related compensation expense. After 9 months, the company estimates that it is possible, but not likely that the target will be achieved. Based on this new estimate, the company must
 
 
The objective of accounting for share-based compensation is to recognize compensation expense
 
 
One unintended potential consequence of generous share-based awards is _______ management.
 
 
On January 2, 20X1, Utta Corp. (a calendar-year company) grants 10,000 stock options with a 3-year vesting period to certain employees. On the grant date, the market price of the stock is equal to the exercise price and the company estimates that 7% of the options will be forfeited. On the date of grant, the estimated value of the options is $6 per option. For the year ended December 31, 20X3, Utta should
 
 
 
 
 
 
 
 

On January 2, 20X1, Utta Corp. (a calendar-year company) grants 10,000 stock options with a 3-year vesting period to employees. On the grant date the company estimates that 7% of the options will be forfeited. On the date of grant, the estimated value of the options is $6 per option. During 20X2, Utta increases its estimate of stock option forfeitures to 10%. For the year ended December 31, 20X2, Utta should
 
 
On January 2, 20X1, Utta Corp. (a calendar-year company) grants 10,000 stock options with a 3-year vesting period to employees. On the grant date, the market price of the stock is equal to the exercise price and the company estimates that 7% of the options will be forfeited. On the date options are granted, their estimated value is $6 per option. For the year ended December 31, 20X1, Utta should
 
 
On January 2, 20X1, Utta Corp. (a calendar-year company) grants 10,000 stock options with a 3-year vesting period to employees. On the grant date, the market price of the stock is equal to the exercise price. On the date of grant, the estimated value of the options is $6 per option. For the year ended December 31, 20X1, Utta should
 
 
On January 2, 20X1, Utta Corp. (a calendar-year company) grants 15,000 stock options with a 3-year vesting period to employees. On the grant date, the market price of the $1 par value stock is equal to the exercise price of $20 per share; the estimated market value of each option is $5. The company's average tax rate is 30%. To reflect the tax effect of these nonqualifying stock options, Utta Corp. should (Select all that apply.)
 
 
On January 2, 20X1, Utta Corp. grants 10,000 stock options with a 3-year vesting period to employees. On the grant date, the market price of the stock is equal to the exercise price. The estimated value of the options on the date of grant is $6 per option. On the date of grant, the company should
 
 
 
 
 
 
 
 

On January 2, 20X1, Werner Corp. grants 20,000 stock options with a 2-year vesting period to employees. On the grant date, the market price of the $1 par value stock is equal to the exercise price. The estimated value of the options is $5 per option. On December 31, 20X1, the company should credit
 
 
On January 2, 20X1, Werner Corp. grants 20,000 stock options with a 2-year vesting period to employees. On the grant date, the market price of the stock is equal to the exercise price. The estimated value of the options is $5 per option. On December 31, 20X1, the company should debit
 
 
On January 2, 201X1, Muenster Corp. (a calendar-year company) grants 10,000 stock options with a 3-year vesting period to employees. On the grant date, the market price of the $1 par value stock is equal to the exercise price of $20 per share. The estimated value of the options is $4 per option. During 20X4, 8,800 stock options were exercised. In 20X5, the remaining stock options expire. How will the expiration of the stock options affect the company's compensation expense?
 
 
On the date of grant, Gunter Inc. estimated the fair value of restricted stock units. After recognizing compensation for two years, but before the restriction is lifted, the fair value of the stock increased. Gunter should:
 
 
On the date of grant, Sadler Corp. estimated the fair value of restricted stock units representing common shares issued under its RSU plan. At the end of the vesting period, employees can elect to receive cash instead of common stock. After recognizing compensation for two years, but before the restriction is lifted, the fair value of the stock increased. Sadler should:
 
 
On the date when stock options are granted, the sponsoring company should
 
 
Pfeffer Company reports net income of $120,000 for 20X1; the company's tax rate is 40%. Throughout the year, 200,000 common shares were outstanding. Pfeffer's basic EPS will be
 
 
The _______ price of the shares does not affect the recognition of employees' exercise of stock options.
 
 
A primary goal of the rules governing the calculation of EPS is to achieve ________ between companies.
 
 
Public outrage about high profile fraud cases renewed interest in requiring stock option compensation to be __________.
 
 
 
 
 
 
 
 

The rules surrounding the calculation of earnings-per-share are designed to _____ comparability by _______ differences in the calculation from one company to the next.
 
 
Salt Company reports net income of $360 million for 20X1; the company's tax rate is 40%. At the beginning of the year, 200 million common shares were outstanding. On July 1, Salt sells an additional 80 million shares. On October 1, the company distributed a 10% stock dividend. Rounding to the nearest cent, the company's basic EPS will be
 
 
Salt Company reports net income of $360 million for 20X1; the company's tax rate is 40%. Throughout the year, 200 million common shares were outstanding. Salt's basic EPS will be
 
 
Salt Company reports net income of $360 million for 2017; the company's tax rate is 40%. At the beginning of the year, 200 million common shares were outstanding. On July 1, Salt sells an additional 80 million shares. The company's basic EPS will be
 
 
Salt Company reports net income of $360 million for 2017; the company's tax rate is 40%. At the beginning of the year, 200 million common shares were outstanding. On July 1, Salt sold an additional 80 million shares. On October 1, the company distributed a 10% stock dividend and, on December 1, reacquired 24 million of its outstanding shares. The company's basic EPS is (round your answer to two decimal places)
 
 
Selina Inc. sponsors a restricted stock units awards plan under which employees may elect to receive cash. When Selina debits "compensation expense," it should credit:
 
 
Share-based awards may lead to
 
 
Stock award plans that are used to motivate employees to remain with the granting company are referred to as _______ stock awards
 
 
stock option plan with the correct tax treatment: incentive stock option plan
 
 
stock option plan with the correct tax treatment: nonqualified stock option plan
 
 
Stock options are often used as employee incentives; therefore, stock options are typically exercisable
 
 
Stock options are said to be "in the money" if
 
 
Stock options give employees the choice to purchase ________ during a specific time period.
 
 
stock option tax treatment: incentive stock option plan
 
 
stock option tax treatment: nonqualified stock option plan
 
 
The time between the date that options are granted and the first date they can be exercised is referred to as the ________ period.
 
 
timing of issuance of the shares: restricted stock
 
 
timing of issuance of the shares: restricted stock units
 
 
 
 
 
 
 
 

timing of recognition of deferred tax assets relating to stock option plans with the accounting standard: IFRS
 
 
timing of recognition of deferred tax assets relating to stock option plans with the accounting standard: US GAAP
 
 
True or false: Accounting for changes in estimated forfeitures of stock options is consistent with other changes in accounting estimates, which require prospective accounting treatment.
 
 
True or false: Accounting for share-based plans depends on the type of condition that must be fulfilled by the employee to achieve the share-based award.
 
 
True or false: The popularity of stock options as a form of share-based compensation has increased steadily over time.
 
 
True or false: Unlike restricted stock, recipients of restricted stock units (RSUs) benefit by the value of the shares immediately at the date of issuance.
 
 
Typically stock options are exercisable
 
 
Under a ______ stock option incentive plan, the exercise price of stock options must be ______ the market price at the grant date.
 
 
Under current GAAP, stock options must be reported in the income statement at
 
 
Under IFRS, a deferred tax asset relating to stock option plans is recognized when
 
 
Under its restricted stock award plan, Katrin Corp. grants 100,000 of its $1 par value common shares to certain executives on January 2, 2018. The award is contingent on continued employment for 4 years. Shares have a current market value of $10 per share. On January 2, 2021, 10% of the share awards were forfeited. Katrin should credit
 
 
Under its restricted stock award plan, Katrin Corp. grants 100,000 of its $1 par value common shares to certain executives on January 2, 2018. The awards are contingent on continued employment for 4 years. Shares have a current market value of $10 per share. For the year ended December 31, 2021, Katrin should recognize compensation expense of
 
 
Under its restricted stock award plan, Katrin Corp. grants 100,000 of its $1 par value common shares to certain executives on January 2, 2018. The awards are contingent on continued employment for 4 years. Shares have a current market value of $10 per share. On January 2, 2022, Katrin's journal entry should include
 
 
Under its restricted stock award plan, Kilian Corp. grants 100,000 of its $1 par value common shares to certain executives on January 2, 2018. The award is contingent on continued employment for 4 years. Shares have a current market value of $10 per share. On January 2, 2020, 15% of the share awards were forfeited. Kilian should credit
 
 
Under U.S. GAAP, a deferred tax asset related to stock option plans is recorded when ________________ and reversed when ________________.
 
 
Under U.S. GAAP, a deferred tax asset relating to stock option plans is recognized when
 
 
Under ______ vesting, companies can choose to estimate a single fair value for the options, even though they vest over different time periods, and then allocate the total compensation cost equally over the entire vesting period.
 
 
 
 
 
 
 
 

Under which reporting standards are companies allowed to use the straight-line method to account for compensation expense when stock options vest over time (i.e., graded vesting)?
 
 
Wald Corp. allows its employees to purchase shares at a 10% discount. During the current month, employees purchased 1,000 shares for $22.50 per share. Wald should recognize compensation expense of
 
 
Wald Corp. allows its employees to purchase shares at a 10% discount. During the current month, employees purchased 1,000 shares. Wald should recognize the difference between the fair value of the shares and the cash received as a debit to
 
 
What additional factors must be considered when deriving basic EPS assuming that net income and the number of shares outstanding at the beginning of the reporting period are already known? (Select all that apply.)
 
 
What conditions must be met by employee share purchase plans to allow for uncomplicated recognition of the share purchases and no compensation expense to be recognized? (Select all that apply.)
 
 
What counterarguments did the FASB make in response to constituents' criticism on the 1993 stock option exposure draft? (Select all that apply.)
 
 
What factor typically determines the accounting treatment for share-based plans?
 
 
When a company recognizes compensation expense related to restricted stock units awards payable in cash, the company should also credit a(n) _______
 
 
When a company revises its estimate of total compensation because the expected probability changes, the company should record the effect of the change in the _________ period
 
 
When estimates of options forfeitures change, the cumulative effect on compensation is recognized
 
 
When it becomes probable that a performance target will not be met, previously recognized compensation expense must be:
 
 
When stock options are allowed to lapse, paid-in capital from stock options should be reclassified as:
 
 
When stock options expire, compensation expense
 
 
When the tax benefit derived from nonqualified stock options is less than the amount recognized as a deferred tax asset, the company should recognize the difference by
 
 
When the tax benefit derived from nonqualifying stock options exceeds the amount recognized as a deferred tax asset, the company should recognize the difference by
 
 
Which groups or organizations tended to oppose the FASB's 1993 exposure draft that proposed expense recognition of the value of stock options? (Select all that apply.)
 
 
Which method for valuing stock options typically resulted in the recognition of no compensation expense?
 
 
 
 
 
 
 
 

Which of the following accounting numbers is reported most frequently by the media?
 
 
Which of the following accounting treatments is acceptable for recognizing compensation expense related to stock options that vest over several years (graded vesting options)?
 
 
Which of the following are among the factors that must be considered in order to estimate the total compensation associated with stock options? (Select all that apply.)
 
 
Which of the following are considered share-based compensation plans? (Select all that apply.)
 
 
Which of the following are likely advantages of employee share purchase plans for employees? (Select all that apply.)
 
 
Which of the following are valid categories of stock option plans for tax purposes? (Select all that apply.)
 
 
Which of the following events strongly contributed to the reemergence of the debate about accounting for stock options?
 
 
Which of the following is an acceptable alternative for recognizing restricted stock grants at the date of grant?
 
 
Which of the following is a remaining difference between IFRS and U.S. GAAP with respect to earnings per share?
 
 
Which of the following is correct regarding stock options and other share-based plans?
 
 
Which of the following is ignored when recognizing the exercise of stock options?
 
 
Which of the following is true under IFRS with respect to the recognition of compensation expense for graded vesting options?
 
 
Which of the following is true with respect to the accounting profession's response to the demand for comparable EPS numbers?
 
 
Which of the following represent accounting issues that are common to all share-based compensation plans? (Select all that apply.)
 
 
Which of the following represent continuing differences between IFRS and U.S. GAAP with respect to the calculation of EPS? (Select all that apply.)
 
 
Which of the following represent primary reasons given by opponents of the FASB's 1993 exposure draft on stock options? (Select all that apply.)
 
 
 
 
 
 
 
 

Which of the following represents an important accounting issue with respect to stock option plans?
 
 
Which of the following represents a primary goal of calculating earnings per share?
 
 
Which of the following securities represent potential common shares that need to be considered when determining diluted EPS? (Select all that apply.)
 
 
Which of the following statements is correct regarding stock dividends and stock splits?
 
 
Which of the following statements regarding accounting for changes in estimated forfeitures of stock options is correct?
 
 
Which of the following statements regarding the current trend in the popularity of share-based awards are correct? (Select all that apply.)
 
 
Which of the following statements regarding the effect of the intrinsic value method on the valuation of stock options is correct?
 
 
Which of the following stock options is considered "in the money" relating to options with an exercise price of $15 per share?
 
 
Which of the following types of securities potentially could be dilutive with respect to EPS?
 
 
Which of the following would prevent Norbert Company from having a simple capital structure for the purpose of reporting EPS?
 
 
Which organizations or groups initially opposed a 1993 proposed accounting standard on stock options? (Select all that apply.)
 
 
 
 
 
 
 
 

 

Antidilutive securities are excluded from the calculation of EPS because they would
 
 
Because options are not exercised immediately, their valuation includes a(n) ___ ___ component.
 
 
The compensation associated with restricted stock under a stock award plan is:
 
 
 
 
 
 
 
 
 

The "if converted method" assumes that convertible securities were converted into common stock at what point?
 
 
In calculating diluted EPS, which of the following restricted stock awards is included in the calculation?
 
 
The most important accounting objective for executive stock options is:
 
 
 
 
 
 
 
 

 

True or False: Compensation expense must be adjusted during the service period to reflect changes in the fair value of options caused by changes in the market price of the underlying shares.
 
 
True or False: Except for tax considerations the potentially dilutive effect of convertible preferred stock is handled in EPS calculations in much the same way as convertible debt.
 
 
True or False: GAAP requires using intrinsic value accounting for employee stock options.
 
 
True or False: If a company's capital structure includes convertible bonds, diluted EPS might be reduced even if the bonds are not actually converted during the year.
 
 
True or False: Stock options will be dilutive and included in the calculation of diluted EPS if the exercise price is greater than the average market value of the stock.
 
 
Under its executive stock option plan, W Corporation granted options on January 1, 2021, that permit executives to purchase 15 million of the company's $1 par common shares within the next eight years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $18 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. The options are exercised on April 2, 2024, when the market price is $21 per share. By what amount will W's shareholder's equity be increased when the options are exercised?
 
 
Under its executive stock option plan, Z Corporation granted options on January 1, 2021, that permit executives to purchase 15 million of the company's $1 par common shares within the next eight years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $18 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. The options expired in 2027 without being exercised. By what amount will Z's shareholder's equity be increased as a result of having granted the options?
 
 
The value of stock options has a time value component because (Select all that apply.)
 
 
 
 
 
 
 
 

What factors would affect the calculation of diluted EPS if convertible bonds are assumed to have been converted into common stock of the issuing company? (Select all that apply.)
 
 
Which of the following are common types of restricted stock plans? (Select all that apply.) 
 
 
 
 
 
 
 
 

 
Which of the following is a likely advantages of employee share purchase plans for employers?
 
 
 

 
Which of the following will result in the distribution of additional shares? (Select all that apply.)
 
 
 

Restricted stock awards are
 
 
Restricted stock units (RSUs):