Richardson Company is contemplating the establishment of a share-based compensation plan to provide long-run incentives for its top management. However, members of the compensation committee of the board of directors have voiced some concerns about adopting these plans, based on news accounts related to a recent accounting standard in this area. They would like you to conduct some research on this recent standard so they can be better informed about the accounting for these plans. a. Identify the authoritative literature that addresses the accounting for share-based payment compensation plans. b. Briefly discuss the objectives for the accounting for stock compensation. What is the role of fair value measurement?

Richardson Company is contemplating the establishment of a share-based compensation plan to provide long-run incentives for its top management. However, members of the compensation committee of the board of directors have voiced some concerns about adopting these plans, based on news accounts related to a recent accounting standard in this area. They would like you to conduct some research on this recent standard so they can be better informed about the accounting for these plans. a. Identify the authoritative literature that addresses the accounting for share-based payment compensation plans. b. Briefly discuss the objectives for the accounting for stock compensation. What is the role of fair value measurement?

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter7: Financial Activities

Section: Chapter Questions

Problem 21PC

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Richardson Company is contemplating the establishment of a share-based compensation plan to provide long-run incentives for its top management. However, members of the compensation committee of the board of directors have voiced some concerns about adopting these plans, based on news accounts related to a recent accounting standard in this area. They would like you to conduct some research on this recent standard so they can be better informed about the accounting for these plans. Instructions Access the IFRS authoritative literature at the IASB website. (Click on the IFRS tab and then register for free eIFRS access if necessary.) When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following questions. (Provide paragraph citations.) a. Identify the authoritative literature that addresses the accounting for share-based payment compensation plans. b. Briefly discuss the objectives for the accounting for share-based…
Richardson Company is contemplating the establishment of a share-based compensation plan to provide long-run incentives for its top management. However, members of the compensation committee of the board of directors have voiced some concerns about adopting these plans, based on news accounts related to a recent accounting standard in this area. They would like you to conduct some research on this recent standard so they can be better informed about the accounting for these plans.InstructionsIf your school has a subscription to the FASB Codification, go to http://aaahq.org/ascLogin.cfm to log in and prepare responses tothe following. Provide Codification references for your responses. (a) Identify the authoritative literature that addresses the accounting for share-based payment compensation plans.(b) Briefly discuss the objectives for the accounting for stock compensation. What is the role of fair value measurement?(c) The Richardson Company board is also considering an employee…
At a recent board meeting of Dartig Co, a non-executive director suggested that the company’s remuneration committee should consider scrapping the company’s current share option scheme, since executive directors could be rewarded by the scheme even when they did not perform well. A second non-executive director disagreed, saying the problem was that even when directors acted in ways which decreased the agency problem, they might not be rewarded by the share option scheme if the stock market were in decline. Explain the nature of the agency problem. Discuss the use of share option schemes and performance-related pay as methods of reducing the agency problem in a stock-market listed company such as Dartig Co. I need help with a more detailed explanation to the responses
Albaith is a public limited company working since 2000. The company wants to adapt the current purchasing power method to cater to the needs of the shareholders, suppliers, creditors and employees. In order to shift from the conventional cost system to Current Purchasing Power Accounting the manager of the Albaith forwarded few points to be considered by the Board of Directors. Kindly advise the board, which of the following point/s depicts the suitability of the method. a. The shareholders can keep the purchasing power of their investment intact. b. The method may be used when the aim is the maintenance of the purchasing power in general. c. All the given points depict suitability of the CPPA method. d. To assist decision-makers in evaluating trends, when data for a series are expressed in units of constant purchasing power
In developing a compensatory share option plan, a company's objective is to motivate executives and employees to manage the company in a way that increases stock price. to decrease employee turnover. to enhance compensation packages without having to expend cash. to do all of these options.
Consistency of academic literature with the actual behavior of Shell plc.Please take the consensus view among academics regarding the optimal dividend policy and share buybacks and compare it versus the actual performance of the company you selected. Was the behaviour in line with the academically acceptable point of view? If yes, show the similarities, and if no, show the differences. Your practice-based research can be backed by a wide range of publicly available information. Please use only reliable sources.
With respect to the shareholder/manager relationship, which of the following statements is FALSE? a. The managerial salary package should include an incentive component b. Executive stock options do not have expiration dates and are held in perpetuity c. Executive stock options tend to be issued out-of-money d. Performance shares can be used to align manager/shareholder interests
ASSIGNMENT TWODazzle Co. is a stock‐market listed company that manufactures personal protection equipment. At a recent board meeting of Dazzle Co., a non‐executive director suggested that the company’s remuneration committee should consider scrapping the company’s current share option scheme, since executive directors could be rewarded by the scheme even when they did not perform well. A second non‐executive director disagreed, saying the problem was that even when directors acted in ways which decreased the agency problem, they might not be rewarded by the share option scheme if the stock market were in decline. Required:(a) Explain the nature of the agency problem in detail. (b) Discuss the use of share option schemes as a way of reducing the agency problem in a stock‐market listed company such as Dazzle Co.
Compensation at Nonpublic Companies The executive compensation programs of thelargest public companies often include the types of equity-based compensation such as stockoptions and performance shares described in this chapter. Smaller nonpublic companies oftenhave the same types of strategic goals and want to provide the same types of compensationplans but do not have the equity types of compensation to offer because they do not have publicly traded stock.Required:1. What is the primary advantage of equity-based compensation such as stock options and performanceshares?a. It is easier to administer than flat salary or performance-based cash payments.b. Short-term stock prices cannot be influenced inappropriately by executives.c. It aligns managers’ incentives (to increase value) with those of the shareholders.d. It is more consistent with generally accepted accounting procedures than other forms of compensation.2. What types of compensation can nonpublic companies offer that would…
Which of the following situations would compel the management of a company to embark on acapital reduction/reorganisation scheme?A When it wants to make a rights issueB When the company is to be liquidatedC When the company makes persistent losses but management is optimistic about a positive turnaroundD When the company wants to reward the existing shareholders by he issue of bonus shares
In considering its proposed statement of financial accounting standards on business combinations, the FASB received numerous comment letters. Many of these letters addressed the FASB's proposed adoption of the economic unit concept as a valuation basis for less-than-100-percent acquisitions. A sampling of these letters includes the following observations: Bob Laux, Microsoft: Microsoft agrees with the Board that the principles underlying standards should strive to reflect the underlying economics of transactions and events. However, we do not believe the Board's conclusion that recognizing the entire economic value of the acquiree, regardless of the ownership interest in the acquiree at the acquisition date, reflects the underlying economics. Patricia A. Little, Ford Motor Company: We agree that recognizing 100 percent of the fair value of the acquiree is appropriate. We believe that this is crucial in erasing anomalies which were created when only the incremental ownership…
Suppose you were a member of Company X’s board of directors and chairman of the company’s compensation committee. What factors should your committee consider when setting the CEO’s compensation? Should the compensation consist of a dollar salary, stock options that depend on the firm’s performance, or a mix of the two? 3.If “performance” is to be considered, how should it be measured? Think of both theoretical and practical (that is, measurement) considerations.