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Occupy Mall Street (OMS or the “Company”) is a leading real estate management firm that owns and manages over 100 shopping malls across the United States. The Company went public in 2009 and experienced a continued increase in stock price through 2011. With the sustained growth of the business and rising stock price, OMS developed a practice of granting annual stock option awards to its executives at the beginning of each year. On January 1, 2012, OMS granted 1,000 employee share options that cliff vest after a four-year service period, with an exercise price of $40 per share. Using the Black-Scholes pricing model, the Company determined that the grant-date fair-value-based measure of the awards was $20. On the grant date, the Company’s stock was trading at $40 per share. On January 1, 2014, to provide additional retention incentive to its employees for the third and fourth years of service of the 2012 annual grant, OMS will change the terms of the award by modifying the exercise price to $25 per share. Using the Black-Scholes pricing model, management determined that the fair-value-based measure of the awards was $26 after modification and $16 before the terms of the award were modified. The modification did not affect any of the other terms or conditions of the awards. Note that no forfeitures are assumed for the purposes of this case. Required: When answering each of the questions in this case (1 through 5), cite the relevant ASC to support your answers. 1. How much compensation cost should OMS recognize in each year of the award’s service period? 2. How would the accounting for these awards change if the modification to the terms (i.e., exercise price) of the award was made on January 1, 2017, after the awards have become fully vested?
What is the purpose of an umbrella personal liability policy? Who might need one?- How can you determine the financial strength of an insurance company?
Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $244,000, has a four-year life, and requires $76,000 in pretax annual operating costs. System B costs $342,000, has a six-year life..
If Quick Burger can earn 6 percent on its short-term investments, assuming a 365-day year, which of the options would you recommend to minimize the transfer cost?
During the year, Belyk Paving Co. had sales of $2,394,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,431,000, $435,600, and $490,600, respectively. In addition, the company had an interest expense of $2..
Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. Suppose also that the expected return required by the market for a portfolio with a beta of 1 is 8.0%. According to the capital asset pricing model: What i..
You have $33,556.25 in a brokerage account, and you plan to deposit an additional $5,000 at the end of every future year until your account totals $220,000. You expect to earn 12% annually on the account. How many years will it take to reach your goa..
Consider again the choice between outsourcing and in-house assembly of HomeNet discussed in Section 8.3 and analyzed in Table 8.6,
If the current price of Two-Stage’s common stock is $17.80, what is the cost of common equity capital for the firm?
Capital budgeting criteria: ethical considerations An electric utility is considering a new power plant in northern Arizona. Power from the plant would be sold in the Phoenix area, where it is badly needed. Because the firm has received a permit, the..
MT480- Most all people unwittingly purchase many imported goods. Explain how China has been able to devalue their currency, the more specific the better.
What would be the RADR if the project has an estimated beta of 1.5, the risk free rate is 6% and he weighted average cost of capital is 16%?
Alternative: Dividend Policies. What is Keenan’s long run average return on equity?
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