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Accounting for Employee Compensation and Benefits
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Intermediate Accounting Study Set 7

Business

Quiz 19 :
Accounting for Employee Compensation and Benefits

Quiz 19 :
Accounting for Employee Compensation and Benefits

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The first step in measuring compensation expense from granting employee stock options is to determine the fair value on the date of grant.
Free
True False
Answer:

Answer:

True

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The fair value of stock options on the date of grant is usually readily determinable.
Free
True False
Answer:

Answer:

False

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The value of stock options expected to be forfeited reduce compensation expense.
Free
True False
Answer:

Answer:

True

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An employee will generally exercise stock options only when the current market price is above the exercise price of the option.
True False
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The fixed price paid by an employee to acquire a share of stock under an option plan is the ________.
Multiple Choice
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Which of the following items is generally not specified by a compensation arrangement involving stock options?
Multiple Choice
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Which of the following statements regarding stock options is true?
Multiple Choice
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Compensation expense associated with stock options is ________.
Multiple Choice
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Among Fortune 500 companies, which of the following compensation plans is most common?
Multiple Choice
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List and explain the terms that are required to account for the issuance of stock options.
Essay
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An employee who receives an equity-classified award of stock options has the right to receive shares of stock.
True False
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The initial journal entry to record an equity-classified award of stock options increases stockholders' equity on the balance sheet.
True False
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The initial journal entry to record an equity-classified award serves as a disclosure for a stock option plan.
True False
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A stock option plan is generally revalued whenever there is a change in the estimated percentage of options that will be forfeited.
True False
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The compensation associated with equity-classified awards of stock options is ________.
Multiple Choice
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If an unexpected forfeiture of options occurs under a stock option plan, the change in compensation is treated as ________.
Multiple Choice
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For an equity-classified award of stock options, what journal entry is made at the date of grant?
Multiple Choice
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What is the effect of an equity-classified award of stock options on the grant date?
Multiple Choice
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When compensation is recognized under an equity-classified award of stock options, the expiration of stock options is treated as ________.
Multiple Choice
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On January 1, Year 1, Fields Corporation granted 500,000 stock options to certain executives. The options are exercisable no sooner than December 31, Year 3 and expire on January 1, Year 7. The vesting period is 3 years. Each option can be exercised to acquire one share of $10 par common stock for $15. An appropriate option-pricing model estimates the fair value of each option to be $12 on the date of grant. What amount should Fields recognize as compensation expense for Year 1?
Multiple Choice
Answer:
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