Chapter 19, Problem 19.16BYP

(1)

Financial Accounting Standards Board (FASB): FASB is the organization which creates, develops, and approves accounting standards; and administrates generally accepted accounting principles (GAAP).

To determine

To mention: The specific citation for accounting for a change in classification due to change in probable settlement outcome.

(2)

To determine

Stock appreciation rights (SARs): Stock appreciation rights are the compensation plans provided in the form of rights to receive cash or shares for the appreciated value (difference between the market price of shares on the exercise date and the market price of shares on the grant date). The choice between the cash or shares would be chosen either by employers or employees.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

• Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
• Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The entry to record the change in the given circumstance