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valentina_108 [34]
3 years ago
7

On December 31, 2017, Gonzalez Company granted some of its executives options to purchase 180,000 shares of the company's $10 pa

r common stock at an option price of $50 per share. The Black-Scholes option pricing model determines total compensation expense to be $1,350,000. The options become exercisable on January 1, 2018, and represent compensation for executives' services over a three-year period beginning January 1, 2018. At December 31, 2018 none of the executives had exercised their options. What is the impact on Gonzalez's net income for the year ended December 31, 2018 as a result of this transaction under the fair value method?
a. $ 450,000 increase.
b. $1,350,000 decrease.
c. $ 450,000 decrease.
d. $0.
Business
1 answer:
Vesnalui [34]3 years ago
6 0

Answer:

Option C $450,000 decrease

Explanation:

The reason is that the cost to buy the shares in the market is lower than $50 per share so buying the shares at $50 per share is not benefiting the directors at all. This means that the liability which was calculated using the black scholes model was standing at $1350,000 for 3 years and $450,000 for a single year will not be waived off because the directors didn't exercised the option and are taking money benefits which means under fair value method the net income will decrease by $450,000 because this is the amount paid to directors.

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Mr. Hugh Warner is a very cautious businessman. His supplier offers trade credit terms of 3/19, net 60. Mr. Warner never takes t
vekshin1

Answer:

35.92%

Explanation:

The computation of cost of not taking the cash discount is shown below:-

Discount percentage ÷ (100 - Discount percentage) × (360 ÷ (Full Allowed Payment Days - Discount Days))

= 3% ÷ 97% × 360 ÷ (50 - 19)

=  3% ÷ 97% × 360 ÷ 31

=  0.03093 × 11.61290

= 0.359187

= 35.92%

Therefore for computing Mr. Warner's cost of not taking the cash discount we applied the above formula.

3 0
3 years ago
Discuss ten (10) different purposes of an evaluation of salesperson performance and how each purpose affects the performance eva
ololo11 [35]

Answer:

1. To ensure that compensation and other reward disbursements are consistent with actual performance

2. To identify salespersons who needs to be promoted

3. To identify salespersons who should be fired/terminated

4. To determine the specific training and counseling needs of individual

5. To provide information for effective human resource (Succession) planning

6. To identify criteria that can be used to recruit and select salespersons in the future

7. To advise salespersons of work expectations

8. To motivate salespersons

9. To help salespersons set their career goals

10. To enhance effective communications between salesperson and sales manager

Explanation:

How each purpose affects the performance evaluation process

1. To ensure that compensation and other reward disbursements are consistent with actual performance

Compensation and rewards affects the performance and it should be on the merit.

2. To identify salespersons who needs to be promoted

Promotion shall be given on the basis of evaluation

3. To identify salespersons who should be fired/terminated

Termination should be on the basis of performance evaluation

4. To determine the specific training and counseling needs of individual

Training shall be provided on the basis of evaluation

5. To provide information for effective human resource (Succession) planning

Succession planning should be on the basis of performance evaluation so that the exceptional performers must be retained,

6. To identify criteria that can be used to recruit and select salespersons in the future

It helps in understanding the factors that will be useful to recruit and select salespersons

7. To advise salespersons of work expectations

On the basis of evaluation, it will be decided to communicate the work expectations

8. To motivate salespersons

It will help in understanding the factors which motivate the salespersons

9. To help salespersons set their career goals

Salespersons will understand about their future and set their career goals.

10. To enhance effective communications between salesperson and sales manager

It will help to communicate effectively about the expectations of  salesperson and sales manager  and better coordination

7 0
4 years ago
Find the area of a rectangle with the length measuring 8 km and the width measuring 5 km.
Gnoma [55]

Answer:

The answer is <em><u>C. 40 km^2</u></em>

<em><u>8km*5km = 40</u></em>

A = L*W

L = 8 km

W = 5 km

7 0
3 years ago
Calculating Present Values. Suppose you are still committed to owning a $150,000 Ferrari (see Question 9). If you believe your m
luda_lava [24]

Answer:

All the options written are the steps involved in solving the problem. The formula that would be used is compounding formula because we have future value which is $150,000 and rate of return which is 10.25%. Furthermore, here n is 10 years time.

The formula is:

Future Value = Present Value * (1 + r)^n

$150,000 = Present Value * (1.1025)^10

$150,000 = Present Value * 2.6524

$150,000 / 2.6524 = Present Value

Present Value = $56553

So the amount that we should deposit in mutual funds today to buy Ferrari is $56553. The difference is due to rounding off.

3 0
3 years ago
Warrants exercisable at $20 each to obtain 30,000 shares of common stock were outstanding during a period when the average marke
aivan3 [116]

Answer:

The increase in weighted average number of common shares is by 6,000 shares

Explanation:

Application of treasury method is used for exercising the warrants.

Outstanding Common shares = Number of shares / Market price * Exercisable price

= 30,000 shares / $25 * $20

= 24,000 shares

After the warrants have been exercise, the increase in weighted average number of common shares is as follows:

Increase in weighted average number of shares = 30,000 shares - 24,000 shares

= 6,000 shares

Thus, the increase in weighted average number of common shares is by 6,000 shares.

3 0
3 years ago
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