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Question 12
Because management has been so successful, key executives were
granted 1,000 stock appreciation rights at the beginning of 20x4
calling for the difference between the market price of the firm's
stock at grant date and at exercise date to be paid in cash. The
employees must work for 3 years after which the rights are
exercisable. The market price at the beginning of 20x4 was $10,
and on the exercise date (during 20x7) was $18. The fair values of
one right, based on an option pricing model, are as follows: What
amount of compensation expense is recognized for years 20x6 and
20x7?
Question 13
Mobe Co. reported the following operating income (loss) for its
first three years of operations: For each year, there were no
deferred income taxes, and Mobe's effective income tax rate was
30%. In its 2004 income tax return, Mobe elected to carry back
the maximum amount of loss possible. In its 2005 income
statement, what amount should Mobe report as total income tax
expense?
Question 14
Interest cost included in the net pension cost recognized for a
period by an employer sponsoring a defined benefit pension plan
represents the
Question 15
At the beginning of 20x4, XCOR Inc. granted executives a total of
2,000 options to purchase the firm's stock beginning in 20x7. The
fair value of each option at grant date was $3. Initially, no
forfeitures were anticipated. During 20x5 however, forfeitures are