Explanation Stock-Based Compensation: It is an approach that the companies are used to reward their employees by issuing the shares of the company which leads to retain them or attract them and to make them behave in particular manner therefore interests of the employees are associated with that of all other shareholders of the company. Compute the compensation expense for Year 1 for the given plan: Given information, 25 executives, 150 options, fair value is $15.75, expected turnover rate of 15% over 3 years. Estimated total compensation cost = { Fair value per option × Estimated number of share options expected to vest = 25 × 150 × $15

Intermediate Accounting: Reporting and Analysis, 2017 Update

2nd Edition

ISBN: 9781337116619

Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher: Cengage Learning

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Chapter 15, Problem 7RE

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Compute the compensation expense for Year 1 for the given plan.

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Compute the compensation expense for Year 1 for the given plan.

Solution Summary: The author calculates the compensation expense for Year 1 for the given plan based on 25 executives, 150 options, fair value of 15.75, expected turnover rate of 15% over 3 years.

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Compute the compensation expense for Year 1 for the given plan.

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