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(TCO A) On January 1, 2010, Korsak, Inc. established a stock appreciation rights plan for its executives. It entitled them to receive cash at any time during the next four years for the difference between the market price of its common stock and a pre-established price of $20 on 60,000 SARs. Current market prices of the stock are as follows: Compensation expense relating to the plan is to be recorded over a four-year period beginning January 1, 2010. What amount of compensation expense should Korsak recognize for the year ended December 31, 2011? Your Answer: $0 $30,000 CORRECT ANSWER $300,000 $150,000 Instructor Explanation: ($30 $20)X 60,000 X .5 = $300,000 $300,000 $270,000 = $30,000. Chapter 16 Points Received: 0 of 4 5. Question: (TCO A) Foyle, Inc., had 560,000 shares of common stock issued and outstanding at December 31, 2010. On July 1, 2011, an additional 40,000 shares of common stock were issued for cash. Foyle also had unexercised stock options to purchase 32,000 shares of common stock at $15 per share outstanding at the beginning and end of 2011. The average market price of Foyle's common stock was $20 during 2011. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2011? Your Answer: 580,000 588,000 CORRECT 608,000 612,000 Instructor Explanation: 560,000 + (40,000 X 6/12) + [32,000 (32,000 X $15 $20)] = 588,000. Chapter 16.... View Full Document

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