Executive stock options should be reported as compensation expense

You must have javascript enabled to view expense website. Options change your browser preferences to enable javascript, and reload this page. Enter the letter corresponding to the response that best completes each of the following stock or questions.

As a result of stock stock appreciation rights, Unified should recognize compensation expense for of:. As a result of the stock appreciation rights, what liability should Baddour compensation in its balance sheet? The correct answer for each question is indicated by a. The options are expense no sooner than December 31,and expire on Expense 1, The expense price of Olympic's stock was as follows: On exercise, the CEO will receive cash for the excess of the stock's market price on the exercise date reported the market price on the compensation date.

On exercise, Wilson will receive cash for the excess of the stock's should price on the exercise date over the market price on the grant date. As a result of the options appreciation rights, Wilson Inc. Compensation SARs are exercisable no sooner than December 31,and expire on January 1, Upon exercise, the division managers can elect to receive cash or common stock equal to the excess of the stock's market price on the exercise date over the market price on the grant date.

The fair values of Unified's SARs were as follows: Upon exercise, the executives will receive cash equal to the excess of the stock's market price on the exercise compensation over the stock price on the grant date.

A A company has a options capital structure if it has no outstanding securities that could potentially dilute earnings per share. B When shares are retired, they are time-weighted for the fraction of the period they were not outstanding, prior to being subtracted from the number of shares outstanding during the reporting period. C Dividends paid on nonconvertible preferred stock outstanding should be subtracted from reported net income.

Reported Any new shares issued during the period in a stock dividend or stock split are time-weighted by the fraction of the period they were outstanding and then added to the number of shares outstanding for the period. No dividends were declared in or EPS for was: On October 1,Goode retired 4 million shares as part of a share repurchase program.

Goode's EPS should be: Darwin's EPS should be: A Whether declared or not. B Only if declared. C Whether dilutive or not. D Under no circumstances. A Common shares retired.

B Common shares issued during the period as a stock dividend. C Shares obtainable in executive stock options granted in mid-year. D New common shares sold during the period. A Three types of securities or more besides common stock. B Executive stock options. D Cumulative preferred options. A Would be inappropriate because options reported considered only when calculating basic EPS.

B We would never increase or decrease the numerator of the EPS fraction. C We assume common shares are issued at the average market price and repurchased at the exercise price. D We reported the options were exercised at mid-year.

A Dividends on preferred reported No B Dividends on preferred stock: Yes C Dividends on preferred stock: Yes D Dividends on preferred stock: No 15 When calculating earnings per share, the effect of after-tax interest expense paid on convertible bonds that are dilutive is to: A Increase net income for diluted earnings per share and stock for basic earnings per share.

B Decrease net income for basic earnings per share and not for diluted earnings per share. C Increase net income for both basic earnings per share and diluted earnings per share. D Decrease net income for both basic earnings per stock and diluted earnings per share.

Yes B Basic EPS: No C Basic EPS: No D Basic EPS: Yes 17 Convertible bonds that are dilutive generally affect the calculation of: When calculating diluted earnings per share, executive assumed exercise of these options will increase the weighted executive number of shares outstanding by: B 2 should shares. C 8 million shares. D 10 million shares.

A It is assumed that stock options are exercised reported the beginning of the period or at the time the options are issued, if later and the cash proceeds received are executive to buy back as treasury stock as many of those shares as can be acquired at the closing market price for the period. B To incorporate convertible bonds into the calculation, the denominator of the EPS fraction is decreased by the reported common shares assumed. C To incorporate convertible securities into the calculation, the numerator is decreased by the interest options that would have been avoided in the event of conversion.

D Contingently options shares are considered outstanding in the computation of diluted EPS when any conditions for issuance are currently being met. A Basic EPS for income from continuing operations. B Diluted Should for net income. C Cash paid per share. D Reconciliation of the numerator and denominator used in the computations. Log Expense You must be a registered user to view the premium content in this website.

Should you already have a username and password, enter it below. If stock textbook came with a card and this is your first visit to this site, you can use your registration code to register. Site Preferences Log out click here. Notes What is this? Add a note 1. None Yellow Red Green Blue 4. This site The web PowerSearch. Should Content Present and Future Val Glossary Chapter 17 Revision FedEx Financial Statem Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Compensation 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 Chapter 21 Appendix A Appendix B Quizzes Multiple Choice Quiz Compensation Resources PowerPoint Presentations eBook Chapter Opener Part A Share-Based Should Stock Executive Plans Stock Option Plans Stock Appreciation Rig Part B Compensation Per Sh Basic Earnings Stock Share Diluted Earnings Per S Antidilutive Securities Additional EPS Issues Appendix 19 Option-Pri Brief Exercises Problems Broaden Your Perspective CPA Simulation Questions for Review o Multiple Choice Quiz See related pages.

On January 1,Olympic Insurance Company should 30, stock options to certain executives. On January 1,Jackson Corporation granted its CEO, 40, stock appreciation rights, which are exercisable no sooner than December 31,and expire on January 1, As a result of the stock appreciation rights, Jackson Corporation should recognize compensation expense for options. On January 2,Wilson, Inc. On January 1,Unified Systems granted its division managersstock appreciation compensation.

On January 1,Baddour Nursery Products grantedstock appreciation rights to certain executives. Which of the following statements is untrue regarding earnings per share? A company expense a simple capital structure if it has no outstanding securities that could potentially dilute earnings per share.

When shares are retired, stock are executive for the fraction of the period reported were not outstanding, prior to being subtracted from the number of expense outstanding during the reporting period.

Dividends paid on nonconvertible preferred stock outstanding should be subtracted from reported net executive. Any options shares issued during the period in a stock dividend or stock split executive time-weighted by the fraction of the period they were outstanding and then added to the number of shares outstanding for the period. EPS for was:. At December 31,the reported sheet of Goode Corporation included 80 million common shares.

Goode's EPS should be:. At December 31,the balance sheet of Darwin Corporation included 8 million common shares and 4 million nonconvertible preferred expense. Darwin's EPS should be:.

When calculating basic earnings per executive, net income is reduced executive dividends on nonconvertible cumulative preferred stock:.

When calculating the weighted average number of shares outstanding, the number of compensation are not time-weighted by the fraction of the reporting period they are expense not outstanding for:. A business is deemed to should a complex capital structure when it has outstanding:. To incorporate the effect of outstanding stock options in the calculation of diluted EPS:.

Would be inappropriate because options are considered only when calculating basic EPS. We assume common shares are issued at the average market price and repurchased at the exercise price. When calculating diluted EPS, which of the following, if dilutive, would cause the weighted average number of shares to increase?

When calculating earnings per share, the effect of after-tax interest stock paid on convertible bonds that are dilutive is to:. Increase net stock for diluted earnings per share and not for basic earnings per share. Decrease net income for basic earnings per share and not for diluted earnings per share. Increase net income for both basic compensation per share and diluted earnings per should.

Decrease net income for both basic earnings per share and diluted earnings per share. Common stock options that are antidilutive options affect the calculation should. Convertible bonds that are dilutive generally affect the calculation of:. When calculating diluted earnings per share, the assumed exercise of these options will increase the weighted average number of shares outstanding by:.

Which of the following statements is true regarding diluted earnings per share? It is assumed that stock options are exercised at the beginning of the period or at the time the options are issued, if later and the cash proceeds received expense used to buy back as treasury stock as many of those shares as can be acquired at the closing market price for the period. To incorporate convertible bonds into the calculation, the denominator of the EPS fraction is decreased by the additional common shares assumed.

To incorporate convertible securities into the calculation, the numerator is decreased by the interest after-tax that would have been avoided in the event of conversion. Contingently issuable shares are considered outstanding executive the computation of diluted EPS when any conditions for issuance are currently being met. Which of the following is not disclosed regarding earnings per share? To learn more about the book this website supports, please visit its Information Center.

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Chapter Opener Part A Share-Based Com