Now FASB required that all employee stock options should be expensed on income s

Q: Now FASB required that all employee stock options should be expensed on income s

Free cash flows for 2005 will have no effect Because the expense which are recognised in 2005 i.e. $50,000 is just an accounting ajdustment to adhere with matching principles. It does not impact any cash flow in either positive or negative mannar

ID: 2591813 • Letter: N

Question

Now FASB required that all employee stock options should be expensed on income statement. On Jan. 2005, AA company granted total $100,000 (fair value) of stock options to the employee. The exercise price is equal to the market price at the grant time. The employees cannot exercise the options until 2007. According to the new requirement, the company should record an expense $50,000 for 2005 and $50,000 for 2006. During 2008, all options are exercised. What is the effect on the free cash flows for 2005?

Explanation / Answer

Free cash flows for 2005 will have no effect

Because the expense which are recognised in 2005 i.e. $50,000 is just an accounting ajdustment to adhere with matching principles. It does not impact any cash flow in either positive or negative mannar

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Novotny et al. The authors of the paper \'Why are there so many species of herbi

Now FASB required that all employee stock options should be expensed on income s

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Now FASB required that all employee stock options should be expensed on income s

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