Describe the calculation of compensation expense associated with employee stock options. Is it necessary for a company to charge option-related compensation expense to income? Where in the income statement is compensation expenses reported?
Answer to relevant QuestionsWhat is option overhang? What does it measure? How is it determined?Describe the accounting treatment for discontinued operations. How should an analyst treat discontinued operations?Distinguish between the two major methods used to account for revenue under long-term contracts.What are the economic costs to issuing employee stock options at the prevailing market price?Discuss uses of EPS and reasons or objectives for the current method of reporting EPS.
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