^^ Deep, i believe nothing is removed. $4 you put on BS at the beginning. $6 is just to bring that to $10 that you made. Anish
Sponge_Bob_CFA Wrote: ------------------------------------------------------- > The 5% is the level of discount that is viewed as > not being “compensatory” under employee stock > purchase plans. If they offer a discount in > excess of 5% than the transaction has to be viewed > as part of compensation. thanks sponge bob, so if it is in excess of 5% and has to be part of compensation we would do the summarized process that Marakitus had provided on page 1? I’m sorry if these are silly questions. This section had me confused big time and I feel like I’m actually starting to understand it.
anishcandy Wrote: ------------------------------------------------------- > ^^ Deep, i believe nothing is removed. $4 you put > on BS at the beginning. $6 is just to bring that > to $10 that you made. > > Anish OHHH! its clicking lol so the new DTA would be $10 but we had a DTA of $4. Therefore the difference (10-4) is added to equity. Is this right?
Yes sir.
isnt it excess benefits are permanant diffrences?? how they will result into change in DTA?
They are not permanent differences, the initial DTA that you had on your BS was already because of temporary differences!!
Anishcandy is going places lol - your going to pass in June
deep2002 Wrote: ------------------------------------------------------- > Anishcandy is going places lol - your going to > pass in June Deep, Let’s hope we all DO =) … Keep it up.
initial DTA was created because of option expense that gone through income statement…excess tax benefits are never going to hit income statements then how they are temporary diffrences?? intial DTA will be reversed thats fine but what about excess tax benefits…as per my understanding they wont effect DTA at all…
shahhr21 Wrote: ------------------------------------------------------- > initial DTA was created because of option expense > that gone through income statement…excess tax > benefits are never going to hit income statements > then how they are temporary diffrences?? > > intial DTA will be reversed thats fine but what > about excess tax benefits…as per my > understanding they wont effect DTA at all… Hi shahhr21, Will give you a numerical eg without getting into detailed calculation. Current DTA $500 and the options are exercised…actual tax benefit $600 The impact on BS Asset side… DTA 500-500( DTA reversal) Cash-operating 500 cash-Financing (excess tax benefit)100 Liability side Equity 100 (excess tax benefit) BS is in sync $100 each side T chart is the best way to explain but cant draw the same here. Hope this helps.
that’s a good example …
hi rakesh but i didnt get why cash will increase by $100…company is not gonna have more than the price at which stock will be issued…correct me if im wrong rest all things u said are perfectly right but only thing i cant digest is $100 cash?can u explain it bit more? thanks…
shahhr21 Wrote: ------------------------------------------------------- > hi rakesh > > but i didnt get why cash will increase by > $100…company is not gonna have more than the > price at which stock will be issued…correct me > if im wrong > > rest all things u said are perfectly right but > only thing i cant digest is $100 cash?can u > explain it bit more? > > thanks… If someone can confirm this, I think the DTA will get reversed to zero. The remainder becomes a DTL of 100 and an offsetting adjustment of 100 is made to Equity. That is the only way I can see the B/S being balanced.
CPAs can help here…
I think were going too deep here. CFAI would have addressed this don’t you think?
let’s drop it like it’s hot
thanks 2 all…