25. For financial reporting purposes of stock appreciation rights, (1) Compensation expense is recorded in each period prior to exercise based on the excess of market value at the end of each period over a predetermined amount. (2) Compensation expense is adjusted up or down as the market value of the stock changes before the measurement date (which is the exercise date). Therefore, compensation expense could be credited (reduced) if the stock’s market value drops from one period to the next. a. neither S1 nor S2 is correct b. S1 and S2 are correct c. only S1 is correct d. only S2 is correct
25. For financial reporting purposes of stock appreciation rights, (1) Compensation expense is recorded in each period prior to exercise based on the excess of market value at the end of each period over a predetermined amount. (2) Compensation expense is adjusted up or down as the market value of the stock changes before the measurement date (which is the exercise date). Therefore, compensation expense could be credited (reduced) if the stock’s market value drops from one period to the next. a. neither S1 nor S2 is correct b. S1 and S2 are correct c. only S1 is correct d. only S2 is correct
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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25. For financial reporting purposes of stock appreciation rights,
(1) Compensation expense is recorded in each period prior to exercise based on the excess of market value at the end of each period over a predetermined amount.
(2) Compensation expense is adjusted up or down as the market value of the stock changes before the measurement date (which is the exercise date). Therefore, compensation expense could be credited (reduced) if the stock’s market value drops from one period to the next.
a. neither S1 nor S2 is correct
b. S1 and S2 are correct
c. only S1 is correct
d. only S2 is correct
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