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patriot [66]
3 years ago
8

On the grant date, January 1st, 2015, the stock was quoted on the stock exchange at $63 per share. The fair value of the options

on the grant date was estimated at $15 per option. The amounts of compensation expense ABC should recognize with respect to the options during 2015, 2016, and 2017 are:
Business
1 answer:
Dafna11 [192]3 years ago
3 0

Answer:

2015 $31,500

2016 $31,500

2017 $31,500

Explanation:

Number of Options in total × Fair Value of the Stock per option

Where

Number of Options in total = 63

Fair Value of the Stock per option =15

Hence:

(63*100) ×$15

=$6,300 ×$15

= $ 94,500

Compensation expense will be:

2015, 2016, and 2017 will give us 3 years

= $94,500/3

= $31,500 for 2015, 2016, and 2017

Fair value of the options is said to be evaluated on grant date and expenditure is been recognised in 3 years because the employee will be working for 3 years which is from year 2015 to 2017

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3 years ago
Claudine Corporation will deposit $5,700 into a money market sinking fund at the end of each year for the next five years. How m
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Answer:

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Explanation:

Sinking Fund involves saving an series of equal amount periodically invested at certain rate of interest to accumulate a target amount in the future. The target amount might be for the purpose of financing a specific capital project or loan repayment.

Where an equal deposit is invested the sum accumulated (deposit plus interest earned) at the end of the final period is known as the Future Value (FV) of the sinking fund.

The FV is determined as follows:

FV = A × ((1+r)^(n) -  1)/n)

where FV- future value, A- annual cash flow, r-rate of return, n- number of years.

<em>In this question, we have the details as follows</em>;

FV-?, A-5,700, r- 9%, n- 5

<em>So we can determine the FV;</em>

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FV = 5,700 × 5.9847

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