Ch 19 Intermediate 3
Under its restricted stock award plan, Katrin Corp. grants 100,000 of its $1 par value common shares to certain executives on January 2, 2018. The awards are contingent on continued employment for 4 years. Shares have a current market value of $10 per share. On January 2, 2022, Katrin's journal entry should include
a credit to common stock for $100,000.
Which method for valuing stock options typically resulted in the recognition of no compensation expense?
Intrinsic value method
Which of the following statements regarding the effect of the intrinsic value method on the valuation of stock options is correct?
It typically results in zero compensation expense.
Which of the following will result in the distribution of additional shares?
Stock dividends Stock splits
Which of the following are facts or conditions that are specifically set forth in stock option plans?
The time period during which option holders may purchase shares The price at which option holders may purchase shares The maximum number of shares option holders may purchase
Which of the following represent typical goals of executive compensation plans? (Select all that apply.)
To provide compensation to certain employees. To create performance incentives for certain employees.
If an employee is entitled to receive cash under a restricted stock units award plan, the sponsoring company should recognize:
a liability
Frohe Inc. sponsors a restricted stock units award plan under which employees can choose to receive either company stock or cash. During the vesting period, the company should recognize the award as a credit to a:
a liability account
When restrictions are lifted on restricted stock units for par value stock, paid-in capital restricted stock is replaced by
common stock paid-in capital - excess of par
Marian Company granted restricted stock units for its par value stock to its top executives. When the restriction is lifted, Marian should
debit paid-in capital—restricted stock. credit common stock. credit paid-in capital in excess of par.
Which of the following are among the factors that must be considered in order to estimate the total compensation associated with stock options?
expected dividends on the underlying stock expected volatility of the stock price expected risk-free rate of return during the option term
Which of the following are among the factors that must be considered in order to estimate the total compensation associated with stock options?
expected volatility of the stock price expected dividends on the underlying stock expected risk-free rate of return during the option term
Under current GAAP, stock options must be reported in the income statement at
fair value.
Consistent with the revised FASB standard on stock options, the value of stock options
must be recognized as an expense.
Compensation relating to stock option grants should be
recognized over the service period for which employees receive options.
Typically stock options are exercisable
several years after the grant date.
The fair value of stock options is measured when the
stock options are granted.
Which of the following are among the factors that must be considered in order to estimate the total compensation associated with stock options?
current market price of the stock exercise price of the options expected term of the option
Under its restricted stock award plan, Katrin Corp. grants 100,000 of its $1 par value common shares to certain executives on January 2, 2018. The awards are contingent on continued employment for 4 years. Shares have a current market value of $10 per share. For the year ended December 31, 2021, Katrin should recognize compensation expense of
$250,000.
