CHAPTER 19 READING ASSIONMENT&OUTLINE-Saved; to my ac Q- Search in D Insert Desi
ID: 2524231 • Letter: C
Question
CHAPTER 19 READING ASSIONMENT&OUTLINE-Saved; to my ac Q- Search in D Insert Design Layout References Malings Review View Times New INSTRUCTIONS Please read the assigned reading pages BEFORE attempting this outline. Your phrases from the textbook YOU MUST USE YOUR OWN WORDS responses must be typed. You must use your own words. Please do not copy w QUESTION 1 -What is the difference betwoen RESTRICTED STOCK and STOCK OPTIONS? QUESTION 2-How are Restricted Stocks and Stock Options considerod a form of compensation? QUESTION 3-How can a stock compensation package incentivize employoes/executives? YES, it motivates them but so doss a wecekly paycheck QUESTION 4-How do we measure compensation expense for restricted stocks? QUESTION 8S-How do we measure compensation expense for stock options? QUESTION 6-What is the parposeluse of the intrinsic value method? QUESTION -What is the controversy surrounding use of the intrinsic value method? QUESTION -Describe the accounting for stock options QUESTION 9-Describe what is the treasury stock method. When is it used QUESTION 910-IN YOUIR OWN WORDS, what does earnings per share mean? IN YOUR OWN WORDS, IN YOUR OWN WORDS, IN YOUR OWN WORDS QUESTION 11-How can the issuance of stock options afflect EPS QUESTION 12-What is a "simple capital structure" QUESTION 13-What is a 'complex capital structure QUESTION ?"-what does potential shares, mean? QUESTION 1s-Describe what is meare by the weighbed-average number of common shares QUESTION 16-Dfferentiate the efect on EPS of the sale of new shares, a stock dividend or stock split, and the reacquisition of shares QUESTION817 Describe the way EPs information should be reported in an income statement 3 a wR T s lock UBAN command control option commandExplanation / Answer
Stock Options Restricted Stocks Here employees are given the option to buy stock as and when it vests. Here employees are allotted stocks and become owner of the stock as and when it vests. Ownership is at the option of the employee and also subject to complying with terms and conditions, failing which option cannot be exercised. There is no such risk of failing to exercise option and ownership is assured. These are also risky as they can become worthless if the stock price is lesser than the strike price. They do not become worthless if the stock price is lesser than the price at which stock is rewarded to the employee. They are higher reward and high risk investments They are not higher risk, but good reward assuring investments.