On january 1 2006 sooner or later inc granted 1000

Assignment Help Accounting Basics

Reference no: EM13598516

On January 1, 2006, Sooner or Later Inc. granted 1,000 "at-the-money" employee stock options. To align the compensation of the employees with the financial performance of the company, the award will vest only if cumulative revenue over the following three-year reporting period is greater than $10 million and the employees are still employed by Sooner or Later. As of the date of the grant, management believes it probable that the company will achieve cumulative revenue in excess of $10 million over the following three-year period.

Each award has a grant-date fair value of $9. Sooner or Later's valuation professionals have indicated that if the revenue target was factored into the fair value assessment, the grant-date fair value would be $6.

Sooner or Later adopted ASC 718, Compensation - Stock Compensation (FASB Statement No. 123(R), Share-Based Payment), in 2005.

Revenue in each of the next three years was as follows:

2006: $2 million

2007: $5 million

2008: $4 million

Required:

• Should Sooner or Later use the $6 grant-date fair value or the $9 grant-date fair value to measure its compensation cost?

• Over how many years should Sooner or Later recognize compensation cost associated with the stock options, and how much, if any, should be recognized in each of those years? The effects of forfeitures and income taxes should be ignored.

Reference no: EM13598516

Questions Cloud

A corporation has 60000 shares of 25 par value stock : a corporation has 60000 shares of 25 par value stock outstanding that has a current market value of 120. if the

The customer would like modifications made to product y45 : scales corporation has received a request for a special order of 6000 units of product y45 for 13.70 each. product y45s

Choose two competitor companies of your choice that are us : choose two competitor companies of your choice that are u.s. gaap publicly traded companies. determine and compare

Using the double-declining-balance depreciation method : porter inc. acquired a machine that cost 720000 on october 1 2010. the machine is expected to have a four-year useful

On january 1 2006 sooner or later inc granted 1000 : on january 1 2006 sooner or later inc. granted 1000 at-the-money employee stock options. to align the compensation of

Why do you think gaap requires restatement of prior : why do you think gaap requires restatement of prior financial statements if there is a change in reporting entity?

A sales budget has been prepared for june management wants : a sales budget has been prepared for june. management wants the amount of ending inventory each month to be equal to 10

The required volume of output to produce the motors will : paz inc. manufactures a product which contains a small motor. the company has always purchased this motor from a

The companys past records show collection of credit sales : nodles company projected unit credit sales for the last four months of the year as shown belowseptember 3000october

User Account

All Pages