1. On January 1, 2016, a company's new president was awarded a $200,000 bonus that would be...
Question:
1. On January 1, 2016, a company's new president was awarded a $200,000 bonus that would be paid out in two $100,000 installments in 2018 (year 3) and 2019 (year 4) of employment, contingent on employment through the year ending December 31, 2017. How much should the company expense for this bonus in 2017 and 2018?
A. $0 for 2017; $100,000 for 2018
B. $100,000 for 2017 and $0 for 2018
C. $100,000 for 2017 and $100,000 for 2018
D. $200,000 for 2017 and $0 for 2018
2. On January 1, 2016, Caifeng Foods issued stock options for 40,000 shares to a division manager. The options have an estimated fair value of $5 each. To provide additional incentive for managerial achievement, the options are not exercisable unless Caifeng's stock price increases by 5% in four years. Caifeng Foods initially estimates that it is not probable the goal will be achieved. How much compensation will be recorded in each of the next four years?
A. $10,000 B. $45,000 C. $50,000 D. No effect
3. A company, upon initial recognition of an asset retirement obligation, should not take which of the following actions?
A. Allocate asset retirement cost to expense over the useful life of the related asset.
B. Measure the asset retirement cost at fair value.
C. Capitalize the asset retirement cost by increasing the carrying amount of the related asset.
D. Capitalize the asset retirement cost at its undiscounted cash flow value
Please do explain also.
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella