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A: Hi student Since there are multiple questions, we will answer only first question.
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Arts Corporation offers a generous employee compensation package that includes employee stock options. The exercise price has always been equal to the market price of the stock at the date of grant. The corporate controller, John Jones, believes that employee stock options, like all obligations to issue the corporation's own stock, are equity. The new staff accountant, Marcy Means, disagrees. Marcy argues that when a company issues stock for less than current value, the value of preexisting stockholders' shares is diluted.
Pretend you are hired to debate the issues of the proper treatment of opinions written on a company's own stock. Formulate your argument, citing concepts and definitions to buttress your case, assuming:
i. You are siding with John
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- At the recent shareholders' meeting in June 2022, the CEO of a small bank proposed a plan to offer each of its employees 250 incentive options for Class A common stock. The key provisions of the plan are that employees must exercise the options between January 2023 and December 2028, and if an employee terminates their employment with the bank (or is terminated), the options are no longer exercisable. As CEO, how would you defend the stock option plan to the shareholders? Please give an explanation.On January 1, 2018, ABC, Inc. initiated two compensation plans for its employees: · Granted 25,000 Stock Appreciation Rights (SARs) subject to forfeiture if the president leaves or is fired from the company before December 31, 2021. The company can choose to liquidate the commitment with shares only. · Granted 50,000 units of restricted common shares (RSUs) subject to forfeiture if the executive leaves or is fired from the company before December 31, 2021. The employee may elect to receive the cash instead of the shares at the time of exercising the units (RSUs). The market value of ABC's common stock was $ 5 on 1/1/18 and $ 7 on 12/31/18. ABC's common stock is worth $ 1 par. The fair value of the SARs on 1/1/18 was $ 5.5 and as of 12/31/18 it was $ 9. Yes or no: ABC Inc. will have to reevaluate as of 12/31/18 any debt related to these compensation plans in the event of Select one: to. Yes, in the case of SARs. b. None of the above. c. Yes, in the case of RSUs. d. Yes, both for SARs…Under its employee stock purchase plan, Watson Company encourages employee ownership by permitting all employees to buy shares directly from their company at a 15% discount and without brokerage fees. Watson simply records the sale of new shares as employees buy them. What follow-up action should the company perform?
- Slytherin Services, Inc. granted 8 million of its $1 par common shares to executives subject to foreiture if employment is terminated within three years. The common shares have a market price of $6 per share on the grant date of the restricted stock award. Ignoring taxes, what is the total compensation cost pertaining to the restricted shares (first answer, no dollar signs or commas, rounded to the nearest whole dollar)?The first financial instrument was a compensatory stock option plan that was granted to 12 key management positions for the first time. The company wanted to provide these employees with additional compensation and due to financial constraints could not increase salaries. The plan granted these management employees 7,500 options each to purchase shares at $40 each when they were actually worth $80. The options were granted on January 1, 2021 and were exercisable within a two year period beginning January 1, 2023 if the employee was still employed with the company at the time of exercise. A fair value options pricing model determined total compensation to be $820,000. Assume that there are no forfeitures. On January 1, 2023, two employees exercised the options. A)Show the journal entries for December 31, 2021, December 31, 2022, January 1, 2023 for ASPE and IFRS. If the entries are the same under ASPE and IFRS you can just state they are the same. The second financial instrument…Wilson Inc. developed a business strategy that uses stock options as a major compensation incentive for its top executives. On January 1, 2021, 20 million options were granted, each giving the executive owning them the right to acquire five $1 par common shares. The exercise price is the market price on the grant date—$10 per share. Options vest on January 1, 2025. They cannot be exercised before that date and will expire on December 31, 2027. The fair value of the 20 million options, estimated by an appropriate option pricing model, is $40 per option. Ignore income tax.Wilson's compensation expense in 2021 for these stock options was: $800 million. $200 million. $400 million. $0.
- Note: Explain why it is unfair and unethical. How does this affect the shareholder’s control Gree Electric is a Chinese major appliance manufacturer headquartered in Zhuhai, Guangdong province. It is the world's largest residential air-conditioner manufacturer. It was listed on the Shenzhen Stock Exchange. On June 20, 2021, Gree Electric announced its draft Employee Stock Ownership Plan (ESOP). The plan allows ESOP participating employees to buy shares, if they meet certain performance targets, at the price of 27.68 CNY per share. At that time, Gree Electric's share price was 53.68 CNY per share. The performance target is set at only 10% higher in profit, from previous year. Among over 80,000 employees, total number of eligible employees to participate in the ESOP shall not exceed 12000. Among them, Dong Mingzhu, chairman and president of the board of directors, plans to subscribe up to 30 million shares, accounting for about 27.68% of the ESOP. Examine the issues in Gree’s ESOP plan…Davis Corporation is a medium-sized manufacturer of paperboard containers and boxes. The corporation sponsors a noncontributory, defined benefit pension plan that covers its 250 employees. Sid Cole has recently been hired as president of Davis Corporation. While reviewing last year's financial statements with Carol Dilbeck, controller, Cole expressed confusion about several of the items in the footnote to the financial statements relating to the pension plan. In part, the footnote reads as follows. Note J. The company has a defined benefit pension plan covering substantially all of its employees. The benefits are based on years of service and the employee's compensation during the last four years of employment. The company's funding policy is to contribute annually the maximum amount allowed under the federal tax code. Contributions are intended to provide for benefits expected to be earned in the future as well as those earned to date. The net periodic pension expense on Davis…As part of its executive compensation plan, Vertovec Inc. granted 54,000 of its no-par common shares to executives, subject to forfeiture if employment is terminated within three years. Vertovec’s common shares have a market price of $5 per share on January 1, 2020, the grant date of the restricted stock award, as well as on December 31, 2021. 800,000 shares were outstanding at January 1, 2021. Net income for 2021 was $120,000.Required:Compute Vertovec’s basic and diluted earnings per share for the year ended December 31, 2021.
- As part of its executive compensation plan, Vertovec Inc. granted 81,000 of its no-par common shares to executives, subject to forfeiture if employment is terminated within three years. Vertovec’s common shares have a market price of $9 per share on January 1, 2020, the grant date of the restricted stock award, as well as on December 31, 2021. 500,000 shares were outstanding at January 1, 2021. Net income for 2021 was $300,000. Required: Compute Vertovec’s basic and diluted EPSWilma Reynolds, CPA, a member of the American Institute of Certified Public Accountants (AICPA), is controller of Premium Corporation, a publicly owned enterprise with a now- 60%-owned subsidiary, Service Company. Reynolds has informed Premium’s chief financial officer, Wayne Cartwright, that the $150,000 increase in Premium’s investment in Service, which resulted from Service’s just-completed issuance of additional common stock to the public, should be recognized as an increase in Premium’s additional paid-in capital, in accordance with a proposed standard of the FASB. Cartwright countered that Topic 5-H of the SEC Staff Accounting Bulletins (SAB), which is based on SAB 51 and SAB 84, sanctions recognition of the $150,000 increase as non-operating income of Premium. Cartwright expressed the belief that because the SEC has statutory authority to establish accounting standards, its pronouncements should prevail over those proposed or issued by the FASB. Instructions Do you agree with…
