F7M3 Flashcards
What are the two types of employee stock options
- compensatory
2. non compensatory
Non compensatory stock options
no JE until exercise
no compensation expense
requirements for non compensatory stock options
avaliable to all employees in a reasonable time period
Compensatory stock option
book compensation expense in lieu of salary
Option price
exercise price/stock price
price in which the underlying stock can be purchased
exercise date
date the holder must use the option to purchase
FV of the compensatory stock option
determined by an economic pricing model
Vesting/service period
the period to preform service
compensation expense recognized
When is compensation expense calculated
at grant date and allocated over the time period
Compensation expense is measured at
fair value
JE compensation expense
Dr: Compensation expense
CR: APIC
JE exercise compensation expense
DR: Cash (strike price)
DR: APIC - comp
CR: CS
CS: APIC -c/s
Expiration of stock options
no change to stockholer’s equity
just reclassify
Stock Appreciation RIghts
no cash received by corporation
adjusted annually
prospective
do NOT restore
JE SAR
DR: Compensation expense
CR: liability for SAR
