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12 Cards in this Set
- Front
- Back
Stock Award Plans
Total Compensation Expense= |
FV per Share
x Shares Awarded =Total Compensation Allocated over service (vesting) period |
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Stock Award Plans
Earnings Every Year |
DR: Compensation Expense (Total/Years)
CR: PIC-Restricted Stock |
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Stock Award Plans
After Forfeiture Period: |
DR: PIC-Restricted Stock (Shares x FV)
CR: Common Stock (Shares x Par) CR: PIC-Excess of Par (To Balance) |
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Stock Option Plans
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Allow recipients the option to purchase:
a) a specified number of shares of the firm's stock b) at a specified price c) during a specified period of time |
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Option Pricing Model
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Should take into account:
1) exercise price of the option 2) expected term of the option 3) current market price of the stock 4) expected dividends 5) expected risk-free rate of return during the term of the option 6) expected volatility of the stock |
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Stock Option Plans
Total Compensation Expense= |
Estimated FV per Option
x Options Granted = Total Compensation It is allocated to expense over the service (vesting) period. |
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Stock Option Plans
Each Year Before Vesting Date: |
DR: Compensation Expense (Total Comp. x (1.00-Forfeiture %) x 1/yrs)
CR: PIC-Stock Options |
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Compensation is measured when?
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At the grant date.
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Stock Option Plans
Options are Exercised: |
DR: Cash (Exercise Price x Shares)
DR: PIC-Stock Options (Total Comp. Exp. x % Exercised) CR: Common Stock (Shares x Par) CR: PIC-Excess of Par (To Balance) |
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Stock Option Plans
Vested Options Expire without being Exercised: |
DR: PIC- Stock Options (Account Balance)
CR: PIC- Expiration of Stock Plans |
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Stock Option Plans
Market Condition: |
Record Expense when Market Condition is Met
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Employee Share Purchase Plans:
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DR: Cash (Discounted Price)
DR: Compensation Expense (MV x %) CR: Common Stock (MV) |