Menghan Jiang
Xiaoyang Xu
Case Study: “Occupy Mall Street”
The answer to the #1Q:
According to the ASC 718-10-30-2: When companies grant share options to their employees, the calculations of payment (compensation cost) only depend on the fair value. This means that only fair value is useful to calculate compensation cost of OMS recognize in each year of the award’s service period.
Therefore, calculation of compensation cost:
$15*1000 (employee share options)= $15000 for four years service period
$15000/4=$3750 for each period. --- $3750 is compensation cost of OMS recognize in 2012 and in 2013.
According to the ASC 718-20-35-3: If there are some modification to share options transactions with employees, the total compensation cost should include two parts: 1. The compensation costs before modifications. 2. The incremental costs because of modifications. In
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$1500+ $3750(this figure is calculated in the above)=$5250
Therefore, $5250 is the compensation cost of OMS recognize in 2014 and 2015
The answer to the #2Q:
According to the ASC 718-20-55-94: If modifications happen after the awards have become fully vested, the additional compensation costs should be recognized on modification dates.
Refer to OMS case, if the modification to the terms of the award was made on January 1, 2017, this implies that the modified share options are immediately vested. Therefore, the additional compensation cost should be recognized in the 2017.
Based on the calculation of additional compensation from ASC 718-20-55-95:
Fair value of modified share option at January 1, 2017 $12
Less: Fair value of original share option at January 1, 2017 9
Additional compensation cost to be recognized $3
Therefore, the additional compensation cost $3 per share should be recognized in the 2017 by
ARB43, Ch.4, Par.9 ?Where evidence indicates that cost will be recovered with an approximately normal profit upon sale in the ordinary course of business, no loss should be recognized...?
= (487 x 1) / 80 = 6.09 General and Admin. = (.091 x 12.76 x.185) + 23.59 = 2.38 Total Cost (per 100 parts) $32.83
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addition to the cost of the trip in direct terms (ticket) and indirect terms (lost earnings), a
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