...Sooner or Later should use the $9 grant-date fair value to measure the compensation cost. One of the necessary requirements for the employee stock options to vest would be if the cumulative revenue over the following three-year period is greater than $10 million. If the revenue target was factored into the fair value assessment, the grant-date fair value would be $6. Per FASB ASC 718-10-30-27: Performance or service conditions that affect vesting are not reflected in estimating the fair value of an award at the grant date because those conditions are restrictions that stem from the forfeitability of instruments to which employees have not yet earned the right. However, the effect of a market condition is reflected in estimating the fair value of an award at the grant date (see paragraph 718-10-30-14). For purposes of this Topic, a market condition is not considered to be a vesting condition, and an award is not deemed to be forfeited solely because a market condition is not satisfied. Additionally, according to FASB ASC 718-10-55-64: Performance or service conditions that only affect vesting are excluded from the estimate of grant-date fair value, but all other performance or service conditions that affect an award’s fair value are included in the estimate of grant-date fair value. Sooner or Later’s employees have not yet met all service requirements associated with the stock compensation. As such, per the codification, the service conditions (the revenue...
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...Should Sooner or Later use the $6 grant-date fair value or the $9 grant-date fair value to measure its compensation cost? Codification 718-10-30-6 states the measurement objective for equity instruments awarded to employees is to estimate the fair value at the grant date of the equity instruments that the entity is obligated to issue when employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments (for example the exercise share options). That estimates is based on the share price and other pertinent factors, such as expected volatility, at the grant date. In this case Sooner or Later is issuing stock options to employees in order to align their compensation with the performance of the company. However these options can only be vested if revenue for the company is greater than $10 million over a three year period and employees are still employed with the company. The debate is whether Sooner or Later should grant the stock at $9 which is the current grant date fair value or grant the stock at $6 which the fair value taking into consideration the revenue target. According to Codification 718-10-30-6 Sooner or Later should grant the stock at $9 because this is the fair value at the grant date not at some future grant date when conditions have been met. However, Codification 718-10-30-15 Market, performance, and service conditions (or any combination thereof) may affect an award’s exercise...
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...Case 1: Sooner or Later, Inc Background: In this case, Sooner or Later Inc granted 1,000 employee stock options. When the employees still worker in Sooner or Later and the cumulative revenue over the following three year reporting period is greater than $ 10, the award will vest. Question 1: According to the case, Sooner or Later adopted ASC 718, Compensation- Stock Compensation. And ASC 718-10-30-2 says “A share-based payment transaction with employees shall be measured based on the fair value (or in certain situations specified in this Topic, a calculated value or intrinsic value) of the equity instruments issued.” Therefore, the company should use fair value measurement to calculate its compensation cost. The question is that which grant-date fair value should use to measure the company’s compensation cost. In my opinion, the company should use the $9 grant-date fair value. Because the performance conditions which company considered only affect vesting. ASC 718-10-30-27 refers that “Performance or service conditions that affect vesting are not reflected in estimating the fair value of an award at the grant date because those conditions are restrictions that stem from the forfeitability of instruments to which employees have not yet earned the right.” So the revenue target should not be factored into the fair value assessment. Besides, according to ASC 718-10-55-64, “Performance or service conditions that only affect vesting are excluded from the estimate of grant-date...
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...Sooner or Later On January 1, 2006, Sooner or Later Inc. granted its employees 1,000 “at the money” employee stock options, which will vest only when cumulative revenue in the next three-year reporting period exceeds $10 million and the employees are still employed by the company. As of the grant date, management believes that it is probable that the company's cumulative revenue over the next three-year period will be greater than $10 million. The grant-date fair value for each award is $9, though the company's valuation professionals have indicated that the grant-date fair value would be $6 if the fair value assessment includes the revenue target. Sooner or Later Inc. adopted ASC 718, Compensation – Stock Compensation in 2005, and it did achieve cumulative revenue in excess of $10 million over the next three years. The first problem in the case inquires whether Sooner or Later Inc. should use the $6 grant-date fair value or the $9 grant-date fair value to measure its compensation cost. The answer is Sooner or Later Inc. should use the $9 grant-date fair value. According to ASC 718-10-30-27, the grant-date fair value should not incorporate performance or service conditions that affect vesting because those conditions are restrictions that come from the forfeitability of instruments to which employees have not yet earned the right to benefit from the instruments. Sooner or Later Inc.'s restriction that employee stock options will vest only when cumulative revenue surpasses...
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...MEMORANDUM Statement of Facts On January 1, 2006, Sooner or Later Inc. granted 1,000 “at-the-money: employee stock options which will vest only if cumulative revenue over the following three-year reporting period is greater than $10 million and the employees are still employed by Sooner or Later Inc. They adopted ASC 718, Compensation-Stock Compensation in 2005. 1. The grant-date fair value of each award is $9. With the revenue target factored into the fair value assessment the grant-date fair value is $6. 2. Management believes it is probable the company will achieve cumulative revenue in excess of $10 million. 3. The requisites to vest were fulfilled. Revenue of $2 million, $5 million and $4 million was collected in 2006, 2007 and 2008 respectively. Identification of Questions & Alternatives Sooner or Later Inc has the following issue that need to be resolved: 1. Should Sooner or Later use the $6 grant-date fair value or the $9 grant-date fair value to measure its compensation cost? 2. Over how many years should Sooner or Later recognize compensation cost associated with the stock options? How much compensation cost, if any, should be recognized in each of those years? Conclusions and Authoritative Reasoning 1. Sooner or Later Inc. should use the $6 grant-date fair value. a. ASC 718-10-30-6 states that “The measurement objective for equity instruments awarded to employees is to estimate the fair value at the grant date of the...
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...MEMORANDUM Statement of Facts On January 1, 2006, Sooner or Later Inc. granted 1,000 “at-the-money: employee stock options which will vest only if cumulative revenue over the following three-year reporting period is greater than $10 million and the employees are still employed by Sooner or Later Inc. They adopted ASC 718, Compensation-Stock Compensation in 2005. 1. The grant-date fair value of each award is $9. With the revenue target factored into the fair value assessment the grant-date fair value is $6. 2. Management believes it is probable the company will achieve cumulative revenue in excess of $10 million. 3. The requisites to vest were fulfilled. Revenue of $2 million, $5 million and $4 million was collected in 2006, 2007 and 2008 respectively. Identification of Questions & Alternatives Sooner or Later Inc has the following issue that need to be resolved: 1. Should Sooner or Later use the $6 grant-date fair value or the $9 grant-date fair value to measure its compensation cost? 2. Over how many years should Sooner or Later recognize compensation cost associated with the stock options? How much compensation cost, if any, should be recognized in each of those years? Conclusions and Authoritative Reasoning 1. Sooner or Later Inc. should use the $6 grant-date fair value. a. ASC 718-10-30-6 states that “The measurement objective for equity instruments awarded to employees is to estimate the fair value at the grant date of the equity instruments...
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...MEMORANDUM To: Dr. John J. Morris, Department of Accounting From: Group #3 (Taylor Penick, Bret, Mike) Date: June 12, 2012 Subject: Acctg 642: Case 08-2, Sooner or Later Inc. Statement of Facts On January 1, 2006 Sooner or Later Inc. granted 1,000 stock options. The exercise price of the options is equal to the stock price at the grant date. The company has included the following provisions to the options: 1. Stocks options will only vest if the cumulative revenue over the following 3-year period is greater than $10 million 2. The employee must still be employed by the company. The company calculated two different fair values for the stock on the grant date as follows: 1. The actual grant-date fair value was $9 per option. 2. If the revenue target stated early is achieved and factored into the fair value assessment, they calculate the value to be $6 per option. Sooner or Later Inc. adopted ASC 718, Compensation-Stock Compensation (FASB Statement No. 123(R), Shared-Based Payment), in 2005. The revenue for the requisite years are as followed: 1. 2006: $2 million 2. 2007: $5 million 3. 2008: $4 million Identification of Questions and Alternatives The following questions and alternatives have been identified with respect to appropriate grant-date value and the length of recognition associated with the options: 1. At what price should the stock options be valued? a. Alternatives include: the fair value assessment of $9 or the fair value assessment after...
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...Why should school be started later? I do not believe school should be. When I wake up early in the mornings for school I do feel tired and don't want to do much but i take a hot shower and it really gets me going. I think that if school started later than usual that nothing would get accomplished. When I wake up later it makes me feel like the whole day is wasted. I like to do other activities after school and if it ended later I don't think I would have time for anything else. I also support school functions by participating in some of the sports groups. If the day ended at five or six when would the practices be? Hopefully not on the weekends, because I run the family farm and enjoy hunting and fishing on the select few days off. During the...
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...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...
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...involves huge investment in technology and equipment, which caused the production yields, a main driver of the manufacturing cost would fall initially with new processes. Yields would later improve with process optimization and improvement. • But Intel would charge a premium initially and the prices would fall with the entry of competitors and when the production capacity was at its optimum. • But with the entry of Japanese competitors like Fujitsu, the product life cycles of DRAM shrank which necessitated the investment in new technology and equipment than never before and Japanese were able to ramp up their production capacity at a rate faster than Intel and were releasing new products to the market sooner. During that time, Intel launched a DRAM with a single power supply design which was a novel feature and they charged a premium again. But competitors’ products during that time lacked this feature but they had higher memory and cheaper. The Japanese increased market share due to higher demand also gave them a manufacturing costs advantage- economies of scale. • Also, they had a technological advantage in terms of photolithography. The Japanese companies such as fujitsu, Hitachi worked closely in collaboration with Nikon to design superior equipment which was not available in the US until later. This indicates strategic alliance. They had occupied half of the world market in DRAM’S. “Bottom line, Japanese were better at process optimization and improvement thereby enabling...
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...the more money in cash flows. In this case, if you exchange earlier rather than later you are bound to make more because of less chance of fluctuation in the market with such a high interest rate. 5. 16,373,491.20 6. .02066 7. Part 1: 14,736,142.08 Part 2: 13,839,159.52 This happened because the spot rate had changed, and if you convert the cash flows right away, the spot rate effects it the most from the beginning. The interest rate plays a bigger role with a lesser value in the spot rate. 8. MEMO: Dear Ben Holt, The options are tough to decide between, but at the spot rate that we currently have, my way of going about this is the one you should pick. The best way is if we convert our cash flows over the earliest to avoid as much depreciation as we possibly can. Along with this, we should try and convert so the interest rate isn’t as much of an effect if the economy in Thailand declines. The only way I’d say go with your plan is if we believed the spot rate were to decline, which is a very good possibility. But for the most part, if we exchange sooner it allows for a lesser risk for market collapses. Inflation also plays a role in this, and a country with higher inflation brings in more imports. The inflation rate isn’t so much important as the expected spot rate and the forward spot rates. Ultimately I would recommend to go with Option 2 (my part) for the fact that exchanging sooner eliminates...
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...The Matrix, Plato, and Descartes Whether one elects for the “red pill of truth”, or the “blue pill of deception”, the battle for the human mind is being waged. Similarities between the motion picture, The Matrix, “The Allegory of the Cave” from Plato, the Republic, Book VII, 514A1-518D8, and Meditation 1 of The Things of Which We May Doubt, from Rene’s Descartes, Meditations on the First Philosophy 1641, include the existence of the opposing force that seeks to deceive the human (mind) soul, and hold the body captive by existing in a state of illusion. Each character confronts the enemy of deception and must choose what to do with the truth revealed to them. In contrast for some, the reality of the truth will prove to be too much. The knowledge of the truth can still be rejected and living the illusion of a lie can still be accepted. Neo was born enslaved in a pod, physically stored in liquid, and controlled by the artificial intelligence of computers and machines. Neo serves as an energy source and is fed artificial images that hold him in an induced dream state of a virtual reality. Like Neo, the prisoner of Plato’s cave, has been held in bondage since birth. The prisoner is bound with chains in a fixed position, given only the illusion of reality from dancing shadows on the walls from those outside the cave. The cave consists of people holding others captive to a physical existence and mental prison limited by their physical senses. Unlike Neo being bound by...
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...Thus, the skills that are acquired by playing multiple sports help young athletes know the skills and the sports they are genuinely good at. For example, a study from the, “American Medical Society for sports medicine showed that varsity athletes at UCLA- specialized at age 15.4…whereas those who did not make it the intercollegiate level, specialized at age 14.2” (394). Therefore, the student who specialized in their sport during their later mid teen years, showed they had higher athletic success than compared to the athletes who specialized in their sport sooner. The athletes who were more successful most likely played multiple sports before they knew at a later age what sport they were best at. Epstein stated that, “Tiger Woods, demonstrated his swing at age 2 for Bob Hop. But the path of the two-time N.B.A. M.V.P. Steve Nash (who grew up playing soccer and didn’t own a basketball until age 13) or the tennis star Roger Federer (whose parents encouraged him to play badminton, basketball and soccer) is actually the norm” (395). Though Tiger Wood started playing golf at a young age and now is one of the greatest golfer players, this is not really the norm for most athletes. Some athletes may not have the natural gift like Tiger Woods of knowing what sport they are good at a young age. Epstein...
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...soon as samples are processed. The laboratory specimen may be collected by the nurse or phlebotomist, and is processed through the lab upon arrival. Once it is processed, the results or data are easily accessed by the healthcare team to be interpreted. The LIS makes timely diagnosis possible, and even includes “the automatic entry of repeating tests at the time of the original order. An example might include the order “troponin X3,’ which would automatically schedule the first troponin level, with the second 8 hours later and the third level 8 hours after the second and which would subsequently bundle serial tests into one claim for reimbursement ( Hebda & Czar p. 120).” Although a diagnosis may not be made based solely on a lab result, it can indicate that other testing may be necessary. Since the results are posted into the Nursing Information System, the nurse has the capability of reviewing the results and possibly notifying the primary care provider sooner than with the paper alternative. Paper is not only a risk for violation of patient confidentiality, but it also takes more time. Digging through papers searching for results can be timely and make staying organized difficult. Papers can also get lost, accidentally tossed into the shred box, or...
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...Many people tend to believe that boys and girls learn the same amount at the same rate because they are the same age. That is not true, especially when it comes to literacy skills. No science declares that boys are better than girls, or vice versa. However, there is research that states boys develop literacy skills later than girls. Late development of language development and literacy skills in boys is caused by both the genetic makeup of the boy and his environment he is raised in. Learning language and how to read does not come naturally for children, but speech does. Early on, infants learn how to cry, giggle, and coo to express their feelings and wants. Parents and caregivers communicate with the infant through facial expressions, talking to the infant in parentese, and having face-to-face conversations. Vukelich,...
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