3.
How would the Year 2 accounting change if management
determined that the performance condition was improbable of
achievement on December 31, 2013? What would be the cumulative
amount of compensation cost recognized?
4.
How much compensation cost would management recognize in
Year 3 and Year 4 if the December 31, 2014, modification resulted in
the awards becoming probable of achievement?
Additional Case Facts:
Assume the same facts as described above. However,
contemporaneously with the December 31, 2014, modification, OMS
will lose a major tenant to bankruptcy; this loss will have a detrimental
effect on the Company’s financial results for the year ended December
31, 2014. Even though OMS modified the options to reduce the
performance target, loss of the significant tenant prompts OMS to
maintain that the achievement of the performance target is improbable
(i.e., the options are not expected to vest under the original or modified
terms).
Required: