F7/M8 Stock Compensation

Question 1

Noncompensatory stock option

Answer 1

No JE until employee buys stock

No compensatory expense

Question 2

IFRS does not recognize noncompensatory stock option

Answer 2

True

Question 3

Compensatory stock options are valued at Fair value of options issued

Answer 3

True;

Use black scholes method

Question 4

Grant date, date comensatory stock options is issued, does NOT require a JE

Answer 4

True

Allocate compensation expense over the Vesting (Service) Period

Question 5

JE to record Compensatory Stock Option over Vesting Period

Answer 5

Dr: Compensation Expense
Cr: APIC Stock options

Question 6

JE to record expiration of Compensatory Stock Options

Answer 6

Dr: APIC - stock options
Cr: APIC - expired stock options

Question 7

Stock Appreciation Rights (SAR)’s

Answer 7

Entitles an employee to receive the excess of the market price of the stock over a predetermined amount. The excess multiplied by the number of rights is recorded as a compensation expense and a liability

Question 8

Stock Appreciation Rights have to be adjusted annually (prospectively)

Answer 8

Allocate over years vest