📏CPA EXAM PREP

Stock Compensation

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Question

How are restricted stock and RSUs valued differently from stock options?

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Answer

At the grant-date market price of the shares; no option model is needed.

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Question

What makes a cash-settled SAR a liability rather than equity?

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Answer

It is settled in cash, so it is remeasured each period.

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Question

Why does liability-classified compensation expense fluctuate over time?

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Answer

Because the award is remeasured to fair value each reporting period.

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Question

How do service, performance, and market vesting conditions differ in accounting treatment?

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Answer

Service and performance affect expense recognition; market conditions are built into grant-date fair value.

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