Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
As such, when an executive resigns and forfeits on his stock before vesting, the financial statements will reflect this situation. On the one hand, the stocks would be registered as new equity. On the other hand, they would be presented to the other stakeholders -- already existent ones or new ones -- and these would be able to purchase them. In other words, changes would be operated at the level of capitals and equity.
4. If options are allowed to lapse after vesting, what is the effect on the financial statements?
Firms will often intentionally let their stock options suffer devaluations either because they do not wish to interfere within the market and they maintain their objectivity, either because they have a direct interest. In the first scenario, the underlying process of thought is that the market would correct itself after the vesting has been adequately integrated. In the second scenario however, the most common rationale is that the company desires to repurchase part of its shares in order to reduce its debt to the shareowners.
This change is also revealed within the financial statements, in the sections dedicated to borrowed capitals, where changes would be operated to state the value of the lapsed shares, as well as their volume. The specifics depend however on the reporting style of each firm. BT Plc. uses the following reporting style:
Source: Website of BT Plc.,...
Discuss the current issue surrounding executive compensation.
The primary concern with the stocks which have been granted to the executives is given by the fact that the large majority of the executives does not possess sufficient knowledge and/or expertise to understand and best deal with their benefits. This specifically indicates a situation in which training is necessary. The term training might be loosely used at this stage, and it would relate to a meeting during which the financial specialists of the company would explain the details of the stock option compensations to the executives.
The secondary issue is pegged to the ethics and morality which would be used in the exploitation of the stocks. History has revealed numerous instances in which executives used company funds in illicit manners. This is not the case at Stamos & Company and the managers and auditors would have to ensure that it does not become the case.
References:
2005, Explain fair value, Teach Me Finance, http://www.teachmefinance.com/Financial_Terms/fair_value.html last accessed on January 6, 2011
2008, Share-based payments, BT Plc., http://www.btplc.com/report/report08/Financialstatements/Consolidatedfinancialstatements/sharebasedpayments.htm last accessed on January 6, 2011
Website of the FASB, http://www.fasb.org last accessed on January 6, 2011
FASB Accounting Rules Did FASB 157 Cause the Financial Crisis? Since the financial crisis began in February 2007, there has been an ongoing debate in the financial community over the causes of the crisis. One target that has come under fire for its role in the financial meltdown is FASB 157, which created new rules for valuing mortgage-related assets. Wall Street analysts and others blame 157 for implementing mark-to-market accounting standards. They
Accounting Practices Depending on the type and size of a particular health care facility, the generally accepted accounting principles (GAAP) used to conduct medical accounting can vary greatly, and these differences may have significant impact on the eventual delivery of medical services. According to the Financial Accounting Standards Board's (FASB) Accounting Standards Codification, which is "the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be
FASB and IASB: The Financial Accounting Standards Board is an organization in the private sector that establishes financial accounting and reporting standards in the United States since 1973. The standards established by this organization govern the preparation of financial reports by various companies. The mission of the Financial Accounting Standards Board is to set up and enhance financial accounting and reporting standards to provide information and direct the public. On the
Accounting forms the overall backbone of the financial world. Financial markets are predicated on consumer and user confidence. Without confidence, consumers attempting to make financial decisions will be doing so using inaccurate and incomplete information. The lack of transparency regarding the truthfulness of reported numbers creates uncertainty within the capital markets. This uncertainty regarding the accuracy of information ultimately undermines the overall financial system, causing harm to society in the
By re-characterizing the Repo 105 dealing as a sale, Lehman detached the account from its balance sheet (Durden, 2010). Lehman frequently augmented its utilization of Repo 105 transactions in the time previous to reporting interludes to decrease its openly reported net leverage and balance sheet. Lehman's intermittent reports did not reveal the money borrowing from the Repo 105 transaction, even though Lehman had in reality borrowed tens of billions of
Accounting standards and IFRS adoption in Cambodia and Thailand The significance of accounting standards Accounting may be considered as a business language through which the statistical results can be acquired which help in analyzing how well the firm is functioning. They give out timely statements of these statistics and help the stakeholders get all the information they need. Accounting is like a separate language which has its own grammar and these outlines