My first Magazine AC 551 All Assignments | страница 3

greater than $10 million. On December 31, 2013, because of the loss of
several tenants, projected cumulative net income over the four-year
period had been revised down to $9 million. As a result, management
determined that the performance condition had become improbable to
achieve.
On December 31, 2014, management’s conclusion that the award’s
performance condition was improbable of achievement had not
changed. In response to this, management reduced the performance
condition of the original award to $8 million of cumulative net income
over the four-year period. Using the Black-Scholes pricing model,
management determined that the fair-value-based measure of the
awards was $12 upon modification. The modification did not affect any
of the other terms or conditions of the
awards; thus, the modification did not affect the option’s per-share
fair-value-based measure.
Note that OMS had actually achieved $9.2 million of cumulative net
income over the four-year period.
Required: