CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

On January 2, 2011, Wilson, Inc. granted Brice Wilson, its president, 15,000 stock appreciation rights that are exercisable no sooner than December 31, 2013 and expire on January 1, 2016. On exercise, Wilson will receive cash for the excess of the stock's market price on the exercise date over the market price on the grant date. The market price of Wilson's stock was $40 on January 2, 2011, and $50 on December 31, 2011. As a result of the stock appreciation rights, Wilson Inc. should recognize compensation expense for 2011 of
A. $30,000
B. $50,000
C. $150,000
Explanation: [($50 - 40) x 15,000] / vesting period (3 years).

User Contributed Comments 3

User Comment
gaurav1207 Vesting period = Exc date - Grant date
gaurav1207 correction to above,
Service period = Vesting date - Grant date
Vesting date is the date at which the option can be first exercised
D3456 So what happens in future periods? Say the price returns to $40 in the next period, does this reverse the $50K?
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