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12 Cards in this Set

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  • Back
Stock Award Plans
Total Compensation Expense=
FV per Share
x Shares Awarded
=Total Compensation

Allocated over service (vesting) period
Stock Award Plans
Earnings Every Year
DR: Compensation Expense (Total/Years)
CR: PIC-Restricted Stock
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)
Stock Option Plans
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
Option Pricing Model
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
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.
Stock Option Plans
Each Year Before Vesting Date:
DR: Compensation Expense (Total Comp. x (1.00-Forfeiture %) x 1/yrs)
CR: PIC-Stock Options
Compensation is measured when?
At the grant date.
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)
Stock Option Plans
Vested Options Expire without being Exercised:
DR: PIC- Stock Options (Account Balance)
CR: PIC- Expiration of Stock Plans
Stock Option Plans
Market Condition:
Record Expense when Market Condition is Met
Employee Share Purchase Plans:
DR: Cash (Discounted Price)
DR: Compensation Expense (MV x %)
CR: Common Stock (MV)