Which of the following statements regarding restricted stock is false?Multiple ChoiceEven if the value of restricted stock decreases from the price on the grant date, it retains some value to employee.There are no effective tax planning elections for restricted stock.Like incentive stock options, the employee's income inclusion (the bargain element) occurs when the stock is sold.Like stock options, restricted stock has to vest before it can be sold.

Even if the value of restricted stock decreases from the price on the grant date, it retains some…

Answered: Which of the following statements…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter10: Corporate Governance

Section: Chapter Questions

Problem 5Q: How is it possible for an employee stock option to be valuable even if the firms stock price fails...

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Similar questions

From an employee perspective, how are ISOs treated differently from NQOs for tax purposes? In general, for a given number of options, which type of stock options should employees prefer?
Compensatory stock option plans are a common component of employee compensation packages, allowing employees to purchase company stock at a predetermined price. The financial accounting for such plans involves various considerations. Let's examine a set of statements related to compensatory stock option plans and identify which statement does not accurately reflect the financial accounting principles associated with these plans. Question: Which of the following statements regarding the financial accounting for compensatory stock option plans is not accurate? Multiple Choice A) Stock options' fair value is recognized as compensation expense over the vesting period. B) The common stock issued upon the exercise of stock options is recorded at its fair market value. C) Changes in the market value of stock options during the vesting period do not impact the recorded compensation expense. D) The par value of common stock issued upon the conversion of options increases total owners' equity.
How is it possible for an employee stock option to be valuable even if the firms stock price fails to meet shareholders expectations?
Many executives own shares in the companies they manage and are also in high tax brackets. When faced with the choice between declaring dividends and repurchasing shares, managers may opt to repurchase shares as it is not a taxable event for them unless they sell their shares and with fewer shares outstanding, the stock price will likely rise. The company's investors may prefer dividend payments. Glven the discussion in the introduction to the course, this is an example of what theory in action? Type your answer and submit
a controller argues that when a company issues stock for less than current value, the value of preexinting stockholders shares is diluted. Is this allowed and right at employee compensation ?
Corporate shareholders generally receive less favorable tax treatment from a qualifying stock redemption than from a dividend distribution. Question 7 options: True False
If a client had used a commission-free broker to trade stock options, but the client is dependent in college, and the client LOST money; would the client have to pay a tax?
A company wants to reward key employees and is considering a restricted stock plan. They have asked you for advice on whether there is an advantage to offering restricted stock units instead of a restricted stock award. What happens if you are fired, retire or die prior to the end of the vesting period?
Which of the following is an advantage of a restricted-stock plan? A.The stock never becomes completely worthless. B.The plan creates new job opportunities in a company. C.The issuance of the stock increases the profit of a company. D.The creation of the plan increases the market price of the stock.
Stock dividends and stock splits are similar in that both do not change total stockholders’ equity. (True/False) A company must accrue a liability for sick pay that accumulates but does not vest. (True/False) A company may exclude a short-term obligation from current liabilities if the firm can demonstrate an ability to complete a refinancing. (True/False) Federal income taxes should be included in an employer’s payroll tax expense. (True/False) Whether an employee earns $80,000 a year or $800,000 a year, all of the earnings will be subject to Medicare deductions. (True/False) To record compensated absences as a liability GAAP establishes four criteria. The employer needs to meet any two of these four criteria in order to recognize a liability for compensated absences. (True/False) Stock dividends and stock splits both cause the number of shares outstanding to increase and retained earnings to decrease. (True/False)
If the IRS increases the capital gain tax, institutional investors' preference for dividends versus repurchases would: a. prefer dividends b. I don't know c. not change d. prefer repurchases
An employee who receives restricted stock as compensation from a corporate employer must include the stock's fair market value in gross income in the year of receipt, even though the employee's ownership rights in the stock are nonvested. True or False True False

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