Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Chapter 19, Problem 19.4P
Stock options; graded vesting; IFRS
• LO19–2, LO19–14
IFRS
Refer to the situation described in P 19–2. Assume Pastner prepares its financial statements using International Financial Reporting Standards (IFRS).
Required:
How might your responses to requirement 1 and requirement 2 differ using IFRS? Explain.
P 19–2
Stock options; graded vesting
• LO19–2
January 1, 2018, the company issued 400,000 executive stock options permitting executives to buy 400,000 shares of Pastner stock for $34 per share. One-fourth of the options vest in each of the next four years beginning at December 31, 2018 (graded vesting). Pastner elects to separate the total award into four groups (or tranches) according to the year in which they vest and measures the compensation cost for each vesting date as a separate award. The fair value of each tranche is estimated at January 1, 2018, as follows:
| Vesting Date | Amount Vesting Fair | Value per Option |
| Dec. 31, 2018 | 25% | $3.50 |
| Dec. 31, 2019 | 25% | $4.00 |
| Dec. 31, 2020 | 25% | $4.50 |
| Dec. 31, 2021 | 25% | $5.00 |
Required:
1. Determine the compensation expense related to the options to be recorded each year 2018–2021, assuming Pastner allocates the compensation cost for each of the four groups (tranches) separately.
2. Determine the compensation expense related to the options to be recorded each year 2018–2021, assuming Pastner uses the straight-line method to allocate the total compensation cost.
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Exercise 19-2O (Algo) EPS; shares issued; stock options [LO19-6, 19-7, 19-8, 19-9]
Stanley Department Stores reported net income of $776,000 for the year ended December 31, 2021.
Additional Information:
Common shares outstanding
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During the year, the market price of Stanley's common stock averaged $27.60 per share.
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Numerator
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Exercise 18-10 (Algo) Retirement of shares [LO18-5]
Borner Communications' articles of incorporation authorized the issuance of 125 million common shares. The transactions described
below effected changes in Borner's outstanding shares. Prior to the transactions, Borner's shareholders' equity included the following:
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record the appropriate journal entry for each of the following transactions:
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers
in millions (i.e., 10,000,000 should be entered as 10).
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Chapter 19 Solutions
Intermediate Accounting
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