Accounting 384 Test 3 - ACCT 384 Test 3 5th Ed Student: _...

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ACCT 384 Test 3 5th Ed Student: ___________________________________________________________________________ 1. FX Services granted 15 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $8 per share on the grant date. Ignoring taxes, what is the effect on earnings in the year after the shares are granted to executives? A. $ 0 B. $ 15 million C. $ 40 million D. $120 million On January 1, 2009, M Company granted 90,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2011 and expire on January 1, 2015. Each option can be exercised to acquire one share of $1 par common stock for $12. An option-pricing model estimates the fair value of the options to be $5 on the date of grant. 2. If unexpected turnover in 2010 caused the company to estimate that 10% of the options would be forfeited, what amount should M recognize as compensation expense for 2010? A. $ 30,000 B. $ 60,000 C. $120,000 D. $150,000 3. Executive stock options should be reported as compensation expense: A. Using the intrinsic value method. B. Using the fair value method. C. Using either the fair value method or the intrinsic value method. D. Only on rare occasions.
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4. On December 31, 2008, Albacore Company had 300,000 shares of common stock issued and outstanding. Albacore issued a 10% stock dividend on June 30, 2009. On September 30, 2009, 12,000 shares of common stock were reacquired as treasury stock. What is the appropriate number of shares to be used in the basic earnings per share computation for 2009? A. 303,000. B. 342,000.
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Accounting 384 Test 3 - ACCT 384 Test 3 5th Ed Student: _...

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