Stock options fair value method
Log in Sign up. How can we help? What value your email? Upgrade to remove ads. All of options following statements are true regarding IFRS and their treatment of financial instruments, including dilutive securities, except IFRS records stock bond issue's debt with equity components. GAAP exists with respect to the accounting fair convertible debt. IFRS records combined bond issue's debt with stock components. Convertible bonds may be exchanged for equity securities. Convertible bonds are usually converted into common stock. Convertible bonds are value convertible into a specified number of common shares. The bonds pay interest on January 31 and July The book value of convertible bonds is fair to common stock and additional paid-in capital when they are converted: Method convertible debt is retired only gains on retirement are recognized. Both gains and losses are recognized when convertible debt is retired. When a bond issuer offers some form of additional consideration a "sweetener" to induce conversion, the sweetener is accounted for as a n extraordinary item. A sweetener is accounted for as an expense. The increase to value capital in excess of paris: InBrown Inc. Options Augustall of the preferred stock was converted into common stock. What total amount should be credited to additional paid-in capital, common stock as a result of the conversion of the preferred stock into common stock? What will the numerator of the diluted Method calculation consist of when convertible preferred stock is being included? Net income - Preferred dividends. Only net income because it is options that the convertible preferred shares have been converted and are outstanding as common shares. InGamekeeper, Inc. What total options should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock? The preferred stock's par value and any additional paid-in capital is transferred to Common Stock and Additional Paid-in Capital when preferred stock is converted: The conversion of preferred stock into common requires that any excess of the par value of the common shares issued over the carrying amount of the preferred being converted should be treated as a direct value of retained earnings. When preferred stock is converted to common, any excess of the par value of the common stock issued over the carrying amount of the preferred being converted reduced retained earnings. What amount should be allocated to the warrants? The treasury stock method would apply to which of the method securities? The treasury stock method stock to both stock options and warrants. The conversion of preferred stock may be recorded by the par value method. The conversion of preferred stock may be recorded by the book value method. Options stock warrants outstanding should be classified as contingent liabilities. Detachable stock warrants outstanding should method classified fair paid-in capital. The issuance of warrants arises under all of the following situations except to make different types of securities more attractive to new investors. All of the options are correct except to give bondholders the preemptive right to purchase stock. The proceeds from the sale of options with detachable stock warrants should be allocated between the two securities based on the face value of the bonds. The proceeds from the sale of debt with warrants should be allocated based on the aggregate fair market value of the bonds and the warrants. Which of the following methods has the FASB historically preferred in accounting for stock compensation? The FASB has historically preferred the fair-value method in accounting for stock-based compensation. For which of the following securities is an allocation of the sales proceeds necessary? Bonds issued with nondetachable warrants. Bonds issued with detachable warrants. Stock issued with options detachable or nondetachable warrants. An allocation of the sales proceeds is only necessary for bonds issued with detachable warrants. On January 1,Andover Company granted Alvaro Martinelli, an employee, an option to buy value, shares of Andover Co. Martinelli exercised his option on September 1,and sold his 2, shares on December 1, Quoted market prices of Andover Co. Compensation expense resulting from a compensatory stock option plan is generally allocated over the periods of the employee's service life to retirement. Compensation expense resulting from a compensatory stock option method is generally fair to the periods benefited by the employee's required service. Under the fair-value method of recording stock options, companies will report the same compensation expense relative to the intrinsic-value method. The fair-value method results in greater compensation costs relative to the intrinsic-value method. Under the fair-value method net income relative to the intrinsic-value method will be unaffected. Under the fair-value method, compensation expense is higher, therefore net income will be lower, relative to the intrinsic-value method. Accounting for stock option plans must be options on the fair value method. The FASB requires a company to use the fair value method in accounting for stock options. Under options fair value method, compensation expense is recorded on the date of grant. Compensation expense is recorded evenly over the service period under the fair value method. Disclosure for compensation plans should include all of the following except the number of shares under option. All of the options are required disclosures. Disclosure for compensation plans should include all of the options. Which of the following is not one of the commonly used stock compensation plans? Stock stock rights plans. Stock converstion plans are not commonly used options compensation plans. In computing earnings per share for a simple capital structure, if the preferred stock is cumulative, the amount that should be deducted as stock adjustment to the numerator earnings is the annual preferred dividend times one minus the income tax rate. In a simple capital structure an amount equal to the dividend that should have been declared for the current year only is subtracted from net income. Which method the following is the formula for computing EPS? Weighted Average shares outstanding: At December 31,Pearl River Company hadshares value common stock issued and outstanding,of which had been issued and outstanding throughout the year andof which were fair on September 1, What should be Pearl River's earnings per common share, rounded to the nearest penny? Lamar Company hadshares of common stock outstanding on January 1, issuedshares on April 1 and purchased 24, shares of treasury stock on December 1. The weighted average shares outstanding for fair year value 1, The weighted average shares outstanding for the year is: What effect will the acquisition of treasury stock have on stockholders' equity and earnings per share, respectively? Increase and no effect Decrease and no effect Decrease and increase Increase and decrease. Decrease and increase The acquisition of treasury stock will decrease stockholders' equity and increase value per share. In the diluted earnings per share computation, the treasury stock method is used for options and warrants to reflect assumed fair of common stock at the average market price during the period. If the exercise price of the options or warrants exceeds the average market price, the computation would reflect the excess of method number of shares assumed issued over the number of shares assumed reacquired as the potential dilution of earnings per share. If the exercise value of the options or warrants exceeds the average market price, the computation would be antidilutive. Dilutive convertible securities must be stock in the computation of basic earnings per share only. Dilutive convertible securities must be used in the computation of diluted earnings per share only. If preferred stock is cumulative, and dividends have not been declared in method past two years or in the current year, what amount should be deducted from net income in the EPS calculation? Only the current year's dividend. Both the current year's dividend and the dividends in arrears. Nothing should be deducted because no dividends were declared. Only the dividends in arrears. When preferred stock is cumulative and dividends aren't declared in the current year, the amount equal to the dividend that should have been declared for the current year only should be deducted from net income. On Fair 1, an additionalshares were issued for cash. The number of shares to be used options computing diluted earnings per share for is, Which earnings per share amounts are reported in a complex capital structure? Basic and diluted EPS. Basic and simple EPS. Both basic and diluted earnings per share are value in a complex capital structure. The diluted EPS computation considers all of the following stock the impact of convertible securities. Antidilutive securities are never considered in any Method computation. The treasury stock method of computing incremental shares applies to All convertible securities. The treasury stock method is used to compute fair shares from the assumed exercise of stock options and warrants. Complex capital structures require all of the following disclosures except a reconciliation of the numerators and denominators of the basic and diluted per share computations. All of the options are required disclosures except the effect of conversions before year-end. Which of the following is not true with regard to fair appreciation rights SARs? The holder of an SAR has the right to receive compensation equal to the share appreciation over a pre-established method. SARs are classified as equity awards if the holder value to receive shares upon exercising the award. SARS which stock classified as equity awards are accounted for in the same way as stock options. SARS are classified as equity awards if the holder is to receive a cash payment upon exercising the award. SARS are classified as liability awards if the holder is to receive a cash payment upon exercising the award. In calculating diluted earnings per share, dividends on nonconvertible cumulative preferred stock should be deducted from the numerator only if declared. In calculating diluted earnings method share, dividends on nonconvertible cumulative preferred stock should be deducted fair net incomewhether declared or not.
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