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Basic Question 10 of 14
On January 1, 2011, Olympic Insurance Company granted 30,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2013 and expire on January 1, 2016. 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. The market price of Olympic's stock was as follows:
December 31, 2011: $15.
January 1, 2011: $14.
December 31, 2011: $15.
If Olympic does not choose the FASB's elective accounting approach, what amount should Olympic recognize as compensation expense for 2011?
User Contributed Comments 2
| User | Comment |
|---|---|
| HenryQ | Intrinsic value...FASB requires fmv. |
| quanttrader | intrinsic value approach |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
explain issues associated with accounting for share-based compensation;
explain how accounting for stock grants and stock options affects financial statements, and the importance of companies' assumptions in valuing these grants and options.
CFA® 2025 Level II Curriculum, Volume 2, Module 11.