Sooner or Later

1. Should Sooner or Later use the $6 grant-date fair value or the $9 grant-date fair value to measure its compensation cost?

718-10-30

30-1 While some of the material in this Section was written in terms of awards classified as equity, it applies equally to awards classified as liabilities.

718-40

30-2 For employee stock ownership plan shares committed to be released to compensate employees directly, the employer shall recognize compensation cost equal to the fair value of the shares committed to be released.

30-3 Unearned employee stock ownership plan shares shall be credited as shares are committed to be released based on the cost of the shares to the employee stock ownership plan. Employers shall charge or credit the difference between the fair value of shares committed to be released and the cost of those shares to the employee stock ownership plan to shareholders' equity in the same manner as gains and losses on sales of treasury stock (generally to additional paid-in capital).

2. Over how many years should Sooner or Later recognize compensation cost associated with the stock options, and how much, if any, should be recognized in each of those years? The effects of forfeitures and income taxes should be ignored.

718-10-35

35-2 The compensation cost for an award of share-based employee compensation classified as equity shall berecognized over the requisite service period, with a corresponding credit to equity (generally, paid-in capital). The requisite service period is the period during which an employee is required to provide service in exchange for an award, which often is the vesting period. The requisite service period is estimated based on an analysis of the terms of the share-based payment award.

35-3 The total amount of compensation cost recognized at the end of the requisite service period for an award of