Concept explainers
What is the allocation period used to expense stock-based compensation?
Answer to Problem 19.1Q
The stock based compensation is to be expensed at accrual basis.
Explanation of Solution
Stock-Based Compensation:
It is the advantage which is earned by the employees by rendering their services in the company. Instead of paying in cash, they are been provided with listed number of shares at a given price. The employer records these benefits as an expense in his books of accounts and also reports it in income statement.
Accrual Period used to Expense Stock based Compensation:
The amount which the employees had received at the end of their service rendering period should be estimated on accrual basis because it is the amount that they had earned while providing the service which is accumulated and received at last.
Hence, the allocation period used is accrual basis to expense stock-based compensation.
Want to see more full solutions like this?
Chapter 19 Solutions
INTERMEDIATE ACCOUNTING-MYLAB W/ETEXT
Additional Business Textbook Solutions
Managerial Accounting (5th Edition)
Cost Accounting (15th Edition)
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
PRINCIPLES OF TAXATION F/BUS.+INVEST.
Financial Accounting (12th Edition) (What's New in Accounting)
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
- Why is the return associated with common stock referred to as a residual claim? Contrast this kind of claim with a fixed claimarrow_forwardThe purpose of a statement of retained earning is to ?arrow_forwardWhich of the following is taxable compensation? A. Commissions B. Honoraria C. Gains on exercise of stock options D. All of the above E. None of the abovearrow_forward
- Why are preferred dividends deducted from net income when calculating EPS? Are there circumstances when this deduction is not made?arrow_forwardWhaat is the relationship between Income Measurement and Asset Valuation? carrow_forwardDoes the component cost of preferred stock include or excludeflotation costs? Explainarrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTFinancial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning