Without referring to your notes.... statements, currently, referring, director, employee

sabaruch

A firm grants employee stock options to a director. The director receives 100,000 options with a strike price of $10 per share. The shares currently trade at $8 in the market. The firms financial controller has valued these options using a BSM model and the model is telling him the options are worth $4 each.

FASB has issued guidance on how to record the granting of these options on the firms financial statements.

How would they be recorded before, and after FASB issued this guidance.

tikfed

Compensation expense spread over the vesting period? It doesn't seem the FASB guidance would make a difference since there were no changes mentioned in the fact pattern.

NO EXCUSES

tianxin

Incorrect.

xilige

before - 0. Strike price=10, current price=8. No value.

Now = 100000*4 spread over the vesting period. e.g. if 4 years -> 100000 per year.

CP

needhelp1700

cpk123 Wrote:
-------------------------------------------------------
> before - 0. Strike price=10, current price=8. No
> value.
>
> Now = 100000*4 spread over the vesting period.
> e.g. if 4 years -> 100000 per year.

Well done sir.

troymo

Hmm...I guess I should adjust my line of thinking. I was assuming they were being recorded according to current US GAAP and FASB issued another piece of guidance which wasn't specified.

NO EXCUSES

YAhmed

Another easy one...

Analysis of the capital structure, paying particular attention to PIK issues & zero-coupon bonds is of particular importance when analyzing what? And why?

profil

Yes, PIK is payment in kind.

You're on the right track, but what am I trying to determine?

zephyranalyst

no, it is depreciating.

Cap rate = (R-G)
R=12
so G = -4

since (R-G)=16

CP

Uranus08

A True
B

Revenues: $25,000,000
COGS: $17,000,000

(-3 synergy)

Gross Profit: $8,000,000

Operating expenses: $2,900,000
(-100k ceo pay)

EBIT: $5,100,000
Taxes at 40% $2,040,000
Net Income: $3,060,000

3 28.8%