Stock options

Cobra Company offers its employees a stock purchase plan. According to the plan, employees can purchase stock at 95% of the market value on the purchase date. The stock is purchased from Cobra’s treasury shares. During the year, employees contributed $19 million to the plan and the market value of the shares issued was $20 million. The book value of the treasury stock was $17 million. Ignoring payroll taxes, what amount of compensation expense should Cobra report for the stock purchase plan under U.S. financial reporting standards (U.S. GAAP) and international financial reporting standards (IFRS)? U.S. GAAP IFRS A) $1 million $0 B) $3 million $1 million C) $1 million $3 million D) $0 $1 million

D it’s withing the 5% for gaap the 5% don’t exist in ifrs and the bookvalue does not count

D, IFRS is more strict.

D - it’s within safe harbor limit for US GAAP (N/A for IFRS)

You are good. D indeed.

what section is this?

its in FSA

before Multinational ops… and after Pensions…

yep i agree with D.

can you post the explanation please?

Can anybody explain why it’s D? Thanks,

I am wondering the same thing too

florinpop Wrote: ------------------------------------------------------- > D > it’s withing the 5% for gaap That means non compensatory > the 5% don’t exist in ifrs and the bookvalue does > not count

D its below limit of 5%, not sure about IFRS, got to read that again :frowning:

hmmm… stock options?? a big forgotten subject that i already had on my list for this week. if i’m not mistaken no or little summary or Q’s at end of chapter. i did know the D only because of the 5% discount. luckily the zero wasn’t given as a choice elsewhere.

hey guys don’t confuse employee stock options with stock purchase plans