ACIS 3115 Chapter Notes - Chapter 19: Valuation Of Options, Risk-Free Interest Rate, Restricted Stock

• School: Virginia Tech
• Department: Accounting and Information Systems
• Course: ACIS 3115
• Professor: brovozsky

Document Summary

Goal to provide comp to employees, total comp = market value of shares x # of shares. Share based comp= awards in form of pmt whose value depends on value of co stock sometimes with performance incentive. Acct goal: determine fv of comp and expense comp over period that services are performed. Stock option plans: give employees option to purch a) specific # of shares of firms stock b) at specific price c)during specific period. Historically-> intrinsic value=market price option price; 1993 fasb exposure draft say measure at fv when granted & exp that amt but public hated it so fasb decided to encourage not require. 1) options with 0 interinsic value have no fv and shouldn"t be an exp 2) impossible to measure fv of comp on grant date 3)unacceptable econ consequences of statement (co"s stock using options) now---gave requires recording at fv!