Contabilidad intermedia Capítulo 16 Las empresas emiten deuda convertible por dos razones principales. Uno es el deseo de aumentar el capital social que, asumiendo la conversión, surgirá cuando se convierta la deuda original. El otro es un. La facilidad con la que se vende la deuda convertible, incluso si la empresa tiene una calificación crediticia pobre. segundo. El hecho de que el capital social tiene costos de emisión que la deuda convertible no. do. Que muchas corporaciones pueden obtener financiamiento a tasas más bajas. re. Que los bonos convertibles siempre se venderán con una prima. C. Que muchas corporaciones pueden obtener financiamiento a tasas más bajas. Cuando la deuda convertible es jubilada por el emisor, cualquier diferencia sustancial entre el precio de adquisición de efectivo y el valor en libros de la deuda debe ser a. Reflejada actualmente en los ingresos, pero no como un rubro extraordinario. segundo. Que se refleja actualmente en los ingresos como un rubro extraordinario. do. Tratamiento como un ajuste de período anterior. re. Como un ajuste del capital pagado adicional. A. Reflejado actualmente en ingresos, pero no como un rubro extraordinario La conversión de acciones preferentes en acciones comunes requiere que cualquier exceso del valor nominal de las acciones ordinarias emitidas sobre el valor en libros del preferido que se está convirtiendo sea a. Reflejada actualmente en los ingresos, pero no como un rubro extraordinario. segundo. Que se refleja actualmente en los ingresos como un rubro extraordinario. do. Tratamiento como un ajuste de período anterior. re. Como una reducción directa de las utilidades retenidas. D. Tratados como una reducción directa de los beneficios retenidos Cuando el producto en efectivo de un bono emitido con warrants de acciones desmontables exceda la suma del valor nominal de los bonos y el valor justo de mercado de los warrants, el exceso debe acreditarse a. El capital pagado adicional de warrants de la acción. segundo. ganancias retenidas. do. Una cuenta de pasivo. re. Prima sobre los bonos a pagar. D. Prima sobre los bonos pagados Una corporación emite bonos con warrants desmontables. El importe que debe registrarse como capital pagado es preferentemente a. cero. segundo. Calculado por el exceso de los ingresos sobre el importe nominal de los bonos. do. Igual al valor de mercado de los warrants. re. Basado en los valores de mercado relativos de los dos valores involucrados. D. Basado en los valores de mercado relativos de los dos valores involucrados. La principal diferencia entre la deuda convertible y las órdenes de compra de acciones es que al ejercer los warrants a. La acción es mantenida por la compañía durante un período de tiempo definido antes de que se emitan al titular de la orden. segundo. El titular tiene que pagar una cierta cantidad de dinero en efectivo para obtener las acciones. do. El stock involucrado es restringido y sólo puede ser vendido por el receptor después de un período de tiempo establecido. re. Ningún capital pagado en exceso de la par puede ser una parte de la transacción. B. El tenedor tiene que pagar una cierta cantidad de dinero en efectivo para obtener las acciones. ¿Cuál de las siguientes no es una característica de un plan de opciones sobre acciones no compensatorias a. Casi todos los empleados a tiempo completo pueden participar de manera equitativa. segundo. El plan no ofrece ninguna característica de opción sustantiva. do. Período de tiempo ilimitado permitido para el ejercicio de una opción, siempre y cuando el titular siga siendo empleado de la empresa. re. Descuento del precio de mercado de la acción no mayor de lo que sería razonable en una oferta de acciones a los accionistas u otros. C. Período de tiempo ilimitado para el ejercicio de una opción siempre y cuando el titular siga siendo empleado de la empresa. La fecha en la que se mide el elemento de compensación en una opción de compra de acciones otorgada a un empleado corporativo ordinariamente es la fecha en que el empleado a. Se le concede la opción. segundo. Ha realizado todas las condiciones previas al ejercicio de la opción. do. Puede ejercer primero la opción. re. La opción. A. se otorga la opción de gastos de compensación resultante de un plan de compensación de opciones sobre acciones es generalmente a. Reconocido en el período de ejercicio. segundo. Reconocidos en el período de la subvención. do. Asignados a los períodos beneficiados por los empleados de servicio requeridos. re. Asignados durante los períodos de la vida útil de los empleados a la jubilación. C. Asignado a los períodos beneficiados por los empleados de servicio. Litke Corporation emitió con una prima de 5.000 una emisión de 100.000 bonos convertibles en 2.000 acciones ordinarias (valor nominal 40). En el momento de la conversión, la prima no amortizada es de 2.000, el valor de mercado de los bonos es de 110.000, y las acciones se cotizan en el mercado a 60 por acción. Si los bonos se convierten en comunes, ¿cuál es la cantidad de capital pagado en exceso de la par a ser registrada en la conversión de los bonos a. 25000 b. 22.000 c. 32.000 d. 40.000 100.000 2.000 - (2.000 40) 22.000. El 1 de marzo de 2010, Ruiz Corporation emitió 800.000 de 8 bonos no convertibles a 104, los cuales vencieron el 28 de febrero de 2030. Además, cada bono de 1.000 se emitió con 25 bonos de acciones desmontables, cada uno de los cuales le dio derecho al comprador por 50 Una acción ordinaria de Ruiz, valor nominal 25. Los bonos sin los warrants normalmente se venderían a 95. El 1 de marzo de 2010, el valor justo de mercado de las acciones ordinarias de Ruizs era de 40 por acción y el valor justo de mercado de los warrants era de 2,00 . ¿Qué monto debe registrar Ruiz el 1 de marzo de 2010 como capital pagado de warrants de acciones a. 28.800 b. 33.600 c. 41.600 d. 40.000 (800.000 .95) (800 25 2) 800.000 800.000 1.04 832.000 40.000 832.000 41.600. 800,000 El 7 de abril de 2010, Kegin Corporation vendió una emisión de bonos de 2.000.000, veinte años, 8 por ciento por 2.120.000. Cada bono de 1,000 tiene dos warrants desmontables, cada uno de los cuales permite la compra de una acción de las acciones comunes de las corporaciones por 30. La acción tiene un valor nominal de 25 por acción. Inmediatamente después de la venta de los bonos, los valores de las corporaciones tenían los siguientes valores de mercado: 8 bonos sin warrants 1,008 Warrants 21 acciones ordinarias 28 ¿Qué cuentas debían retener Kegin para registrar la venta de los bonos a. Bonos a Pagar 2.000.000 Prima de los Bonos a Pagar 77.600 Pago de CapitalSuspensiones de Capital 42.400 b. Obligaciones por pagar 2.000.000 Prima sobre los bonos pagaderos 16.000 Capital pagadoBases de acciones 84.000 c. Bonos a Pagar 2.000.000 Prima de los Bonos a Pagar 35.200 Bono de Pago CapitalStock 84.800 d. Bonos a Pagar 2.000.000 Primas sobre los Bonos a Pagar 120.000 C. Obligaciones a Pagar 2.000.000 Prima sobre los Bonos Pagables 35.200 Bono Pago de Capital 84.800 (2.000 1.008) (4.000 21) 2.100.000 2.016.000 2.120.000 2.035.200, bonos: 2.000.000 2.100.000 84.000 Primas: 35.200 2.120.000 84.800. 2.100.000 n el 1 de mayo de 2010, Payne Co. emitió 300.000 de 7 bonos a 103, los cuales vencen el 30 de abril de 2020. Veinte bonos de acciones desmontables que dan derecho a adquirir 40 acciones de acciones comunes de Paynes Unido a cada bono de 1.000. Los bonos sin los warrants se venderían a 96. El 1 de mayo de 2010, el valor razonable de las acciones ordinarias de Paynes era de 35 por acción y de los warrants era de 2. El 1 de mayo de 2010, Payne debe acreditar el capital pagado de Warrants para. 11.520. segundo. 12.000. do. 12.360. re. 21.000 (300.000 .96) (6.000 2) 300.000 300.000 1.03 309.000 12.000 309.000 12.360. 300.000 n El 1 de mayo de 2010, Payne Co. emitió 300.000 de 7 bonos a 103, que vencen el 30 de abril de 2020. Veinte bonos de acciones desmontables que dan derecho al titular a comprar 40 acciones de una acción de Paynes Unido a cada bono de 1.000. Los bonos sin los warrants se venderían a 96. El 1 de mayo de 2010, el valor razonable de las acciones ordinarias de Paynes era de 35 por acción y de los warrants era 2. El 1 de mayo de 2010, Payne debe registrar los bonos con a. Descuento de 12.000. segundo. Descuento de 3.360. do. Descuento de 3.000. re. Prima de 9,000 B. descuento de 3,360 300,000 - (288,000 / 300,000) 309,000 3,360. El 4 de julio de 2010, Chen Company emitió por 4.200.000 un total de 40.000 acciones de 100 de valor nominal, 7 acciones preferentes no acumulativas, junto con una garantía separable para cada acción emitida. Cada warrant contiene el derecho de comprar una acción de Chen 10 acciones ordinarias de valor nominal por 15 por acción. La acción sin los warrants vendría normalmente para 4.100.000. El precio de mercado de los derechos el 1 de julio de 2010, fue de 2,50 por derecho. El 31 de octubre de 2010, cuando el precio de mercado de la acción ordinaria era de 19 por acción y el valor de mercado de los derechos era de 3.00 por derecho, se ejercitaban 16.000 derechos. Como resultado del ejercicio de los 16.000 derechos y la emisión de las acciones ordinarias relacionadas, qué anotación de la revista Chen haría a. Efectivo 240,000 Acciones ordinarias 160,000 Capital pagado en Exceso de Par 80,000 b. Efectivo 240.000 Pago de capital Bursas de opción 40.000 Acciones ordinarias 160.000 Pago de capital en exceso de par 120.000 c. Efectivo 240,000 Pago de CapitalStock Warrants 100,000 Acciones Ordinarias 160,000 Pago de Capital en Exceso de Par 180,000 d. Efectivo 240,000 Pago de capital Bursas de capital 60,000 Acciones ordinarias 160,000 Pago de capital en exceso de Punto 140,000 B. Efectivo 240,000 Pago de capital Bono de stock 40,000 Acción común 160,000 Pago de capital en exceso de Punto 120,000 Dr. Efectivo: 16,000 15 240,000.Pago de capitalStocker Warrants: 100,000 16/40 40,000 Cr. Común de existencias: 16.000 10 160.000 Cr. Capital pagado en exceso de par: (5 2,50) 16,000 120,000. Vernon Corporation ofreció bonos de cinco años desmontables para comprar una acción ordinaria (valor nominal 5) a 20 (en un momento en que la acción se estaba vendiendo para 32). El precio pagado por 2.000, 1.000 bonos con los warrants adjuntos fue de 205.000. El precio de mercado de los bonos de Vernon sin los warrants era de 180.000, y el precio de mercado de los warrants sin los bonos era de 20.000. ¿Qué cantidad se debe asignar a los warrants? 20.000 b. 20.500 c. 24.000 d. 25.000 20.000 (20.000 180.000) 205.000 20.500. El 1 de mayo de 2010, Marly Co. emitió 500.000 de 7 bonos a 103, los cuales vencen el 30 de abril de 2020. Veinte bonos de acciones desmontables que dan derecho a adquirir 40 acciones de Marlys, con valor nominal de 15 A cada enlace 1000. Los bonos sin los warrants se venderían a 96. El 1 de mayo de 2010, el valor razonable de las acciones ordinarias de Marlys era de 35 por acción y de los warrants era de 2. El 1 de mayo de 2010, Marly debía acreditar el capital pagado de Warrants para. 35.000 b. 20.600 c. 20.000 d. 19.200 500 20 2 20.000 (20.000 500.000) 515.000 20.600. Grant, Inc. tenía 40.000 acciones propias (10 de valor nominal) al 31 de diciembre de 2010, que adquirió a 11 por acción. El 4 de junio de 2011, Grant emitió 20,000 acciones propias a empleados que ejercitaron opciones bajo el plan de opciones de acciones de empleados de Grants. El valor de mercado por acción fue de 13 al 31 de diciembre de 2010, 15 al 4 de junio de 2011 y 18 al 31 de diciembre de 2011. Las opciones de compra de acciones se habían otorgado por 12 por acción. Se utiliza el método de coste. ¿Cuál es el saldo de las acciones propias en el balance de las Donaciones al 31 de diciembre de 2011 a. 140.000. segundo. 180.000. do. 220.000. re. 240.000. 20,000 11 220,000 El 1 de enero de 2010, Korsak, Inc. estableció un plan de derechos de apreciación de acciones para sus ejecutivos. Les autorizó a recibir efectivo en cualquier momento durante los próximos cuatro años por la diferencia entre el precio de mercado de sus acciones ordinarias y un precio preestablecido de 20 sobre 60.000 SARs. Los precios actuales del mercado de las acciones son los siguientes: 1 de enero de 2010 35 por acción 31 de diciembre de 2010 38 por acción 31 de diciembre de 2011 30 por acción 31 de diciembre de 2012 33 por acción El gasto de compensación relacionado con el plan se registrará en un Período de cuatro años a partir del 1 de enero de 2010. ¿Qué monto de gasto de compensación debe reconocer Korsak para el año terminado el 31 de diciembre de 2010 a. 180.000 b. 270.000 c. 225,000 d. 1.080.000 (38 - 20) 60.000 .25 270.000. El 1 de enero de 2010, Korsak, Inc. estableció un plan de derechos de apreciación de acciones para sus ejecutivos. Les autorizó a recibir efectivo en cualquier momento durante los próximos cuatro años por la diferencia entre el precio de mercado de sus acciones ordinarias y un precio preestablecido de 20 sobre 60.000 SARs. Los precios actuales del mercado de las acciones son los siguientes: 1 de enero de 2010 35 por acción 31 de diciembre de 2010 38 por acción 31 de diciembre de 2011 30 por acción 31 de diciembre de 2012 33 por acción El gasto de compensación relacionado con el plan se registrará en un Período de cuatro años que comienza el 1 de enero de 2010. Qué cantidad de gasto de compensación debe reconocer Korsak para el año finalizado el 31 de diciembre de 2011 a. 0 b. 30.000 c. 300.000 d. 150.000 (30 - 20) 60.000 .5 300.000 300.000 - 270.000 30.000. El 1 de enero de 2010, Korsak, Inc. estableció un plan de derechos de apreciación de acciones para sus ejecutivos. Les autorizó a recibir efectivo en cualquier momento durante los próximos cuatro años por la diferencia entre el precio de mercado de sus acciones ordinarias y un precio preestablecido de 20 sobre 60.000 SARs. Los precios actuales del mercado de las acciones son los siguientes: 1 de enero de 2010 35 por acción 31 de diciembre de 2010 38 por acción 31 de diciembre de 2011 30 por acción 31 de diciembre de 2012 33 por acción El gasto de compensación relacionado con el plan se registrará en un Período de cuatro años que comienza el 1 de enero de 2010. El 31 de diciembre de 2012, 16.000 SARs son ejercidos por los ejecutivos. ¿Qué monto de gasto de compensación debe reconocer Korsak para el año terminado el 31 de diciembre de 2012 a. 285.000 b. 195.000 c. 585.000 d. 78.000 (33 - 20) 60.000 .75 585.000 585.000 - 300.000 285.000. El 2 de enero de 2010, Farr Co. emitió bonos convertibles a 10 años a 105. Durante el año 2012, estos bonos fueron convertidos en acciones ordinarias con un valor nominal total igual al monto nominal total de los bonos. En la conversión, el precio de mercado de las acciones ordinarias de Farrs fue 50 por ciento por encima de su valor nominal. El 2 de enero de 2010, los ingresos en efectivo de la emisión de los bonos convertibles deben ser reportados como un. Capital pagado por la totalidad de los ingresos. segundo. El capital pagado por la parte del producto atribuible a la característica de conversión y como un pasivo por el saldo. do. Un pasivo por el monto nominal de los bonos y el capital pagado por la prima sobre el monto nominal. re. Un pasivo por la totalidad de los ingresos. D. un pasivo por la totalidad de los ingresos Lang Co. emitió bonos con warrants de acciones comunes desmontables. Sólo los warrants tenían un valor de mercado conocido. La suma del valor razonable de los warrants y el importe nominal de los bonos supera los ingresos en efectivo. Este exceso se registra como. Descuento sobre los Bonos Pagables. segundo. Prima sobre los Bonos Pagables. do. Acciones comunes suscritas. re. Capital pagado en exceso de garantías de Parstock. A. Descuento sobre los bonos pagaderos El 1 de enero de 2010, Sharp Corp. otorgó a un empleado una opción para comprar 6.000 acciones Sharps 5 acciones ordinarias de valor nominal a 20 por acción. El modelo de precios de opciones Black-Scholes determina que el gasto total de compensación sea de 140.000. La opción se hizo ejercitable el 31 de diciembre de 2011, después de que el empleado completó dos años de servicio. Los precios de mercado de las acciones de Sharps fueron los siguientes: Para el 2011, debe reconocer el gasto de compensación bajo el método del valor razonable de a. 90.000. segundo. 30.000. do. 70.000. re. 0. 140.000 2 70.000. Con respecto al cálculo del resultado por acción, cuál de los siguientes sería el más indicativo de una estructura de capital simple a. Acciones ordinarias, acciones preferentes y valores convertibles en circulación en lotes de incluso miles b. Ganancias derivadas de una línea principal de negocio c. Interés de propiedad consistente únicamente en acciones comunes d. Ninguno de estos C. intereses de propiedad consistentes únicamente en acciones ordinarias En el cálculo del beneficio por acción para una estructura de capital simple, si la acción preferencial es acumulativa, la cantidad que debe deducirse como ajuste al numerador (ganancias) es a. Dividendos preferentes en mora. segundo. Dividendos preferentes en mora (uno menos la tasa de impuesto sobre la renta). do. Dividendo anual de dividendos preferidos (uno menos la tasa de impuesto sobre la renta). re. ninguno de esos. D. ninguno de estos En los cálculos de la media ponderada de las acciones en circulación, cuando se produce un dividendo en acciones o división de acciones, las acciones adicionales son a. Ponderado por el número de días pendientes. segundo. Ponderada por el número de meses pendientes. do. Considerado pendiente a principios de año. re. Considerado pendiente al inicio del primer año informado. D. considerado pendiente al inicio del primer año informado. Al 31 de diciembre de 2010, la Compañía Hancock tenía 500,000 acciones ordinarias emitidas y en circulación, 400,000 de las cuales habían sido emitidas y pendientes a lo largo del año y 100,000 de las cuales fueron emitidas el 1 de octubre de 2010. La utilidad neta para el año terminado el 31 de diciembre, 2010, fue de 1.020.000. Qué debe ser Hancocks 2010 ganancias por acción común, redondeado al centavo más cercano a. 2,02 b. 2,55 c. 2,40 d. 2.27 Milo Co. tenía 600.000 acciones ordinarias en circulación el 1 de enero, emitió 126.000 acciones el 1 de mayo, compró 63.000 acciones de autocartera el 1 de septiembre y emitió 54.000 acciones el 1 de noviembre. . 651.000. segundo. 672.000. do. 693.000. re. 714.000. La siguiente información está disponible para Barone Corporation: 1 de enero de 2011 Acciones en circulación 1.250.000 1 de abril de 2011 Acciones emitidas 200.000 1 de julio de 2011 Acciones propias adquiridas 75.000 1 de octubre de 2011 Acciones emitidas en un dividendo de 100 acciones 1.375.000 El número de acciones a utilizar En el cálculo de las ganancias por acción ordinaria para 2011 es a. 2.825.500. segundo. 2.737.500. do. 2.725.000. re. 1.706.250. Hanson Co. tenía 200.000 acciones ordinarias, 20.000 acciones preferentes convertibles y 1.000.000 de 10 bonos convertibles en circulación durante 2011. La acción preferente es convertible en 40.000 acciones ordinarias. Durante 2011, Hanson pagó dividendos de 1,20 por acción sobre las acciones ordinarias y 4 por acción sobre las acciones preferidas. Cada bono de 1,000 es convertible en 45 acciones ordinarias. La utilidad neta para 2011 fue de 800.000 y la tasa de impuesto sobre la renta fue de 30. Las ganancias por acción diluidas para 2011 son (redondeadas al centavo más cercano) a. 2,77. segundo. 2,81. do. 3.05. re. 3,33. Fugate Company tenía 500.000 acciones ordinarias emitidas y en circulación al 31 de diciembre de 2010. El 1 de julio de 2011 500,000 acciones adicionales fueron emitidas por efectivo. Fugate también tenía opciones sobre acciones pendientes a principios y finales de 2011 que permiten a los titulares comprar 150.000 acciones ordinarias a 20 por acción. El precio promedio de mercado de las acciones ordinarias de Fugates fue de 25 durante 2011. ¿Cuál es el número de acciones que se deben usar en el cálculo del beneficio diluido por acción para el año terminado el 31 de diciembre de 2011 a. 1.030.000 b. 870.000 c. 787.500 d. 780,000 Shipley Corporation tuvo un ingreso neto para el año de 480,000 y un número promedio ponderado de acciones ordinarias en circulación durante el período de 200,000 acciones. La compañía tiene pendiente una emisión de bonos convertibles. Los bonos fueron emitidos hace cuatro años al par (2.000.000), llevan una tasa de interés de 7, y son convertibles en 40.000 acciones ordinarias. La empresa tiene una tasa de 40 impuestos. Las ganancias por acción diluidas son a. 1,65 b. 2.23. do. 2,35. re. 2.58. Colt Corporation compró Massey Inc. y acordó dar a los accionistas de Massey Inc. 50,000 acciones adicionales en 2012 si el ingreso neto de Massey Inc. en el 2011 es de 400,000 o más en el 2010 El ingreso neto de Massey Inc. es 410,000. Colt tiene ingresos netos para 2010 de 800.000 y tiene un número promedio de acciones ordinarias en circulación para 2010 de 500.000 acciones. ¿Qué debe informar Colt como ganancias por acción para 2010 Ganancias Básicas Ganancias Divididas por Acción por Acción a. 1,60 1,60 b. 1,45 1,60 c. 1,60 1,45 d. 1,45 1,45 El 2 de enero de 2010, Perez Co. emitió a la par 10,000 de 6 bonos convertibles en total en 1.000 acciones ordinarias de Perez. Ningún bono se convirtió durante 2010. A lo largo de 2010, Pérez tenía 1.000 acciones ordinarias en circulación. La utilidad neta de Perezs 2010 fue de 3.000 y su tasa de impuesto sobre la renta es de 30. No se registraron valores potencialmente dilutivos distintos a los bonos convertibles durante el 2010. El beneficio diluido de Perez por acción para 2010 sería (redondeado al centavo más cercano) a. 1,50. segundo. 1,71. do. 1,80. re. 3,42. Al 31 de diciembre de 2010, Kifer Company tenía 500.000 acciones ordinarias en circulación. El 1 de octubre de 2011, se emitieron 100.000 acciones adicionales de acciones ordinarias. Además, Kifer tenía 10.000.000 de 6 bonos convertibles en circulación al 31 de diciembre de 2010, que son convertibles en 225.000 acciones ordinarias. No se convirtieron bonos en acciones ordinarias en 2011. La utilidad neta para el año terminado el 31 de diciembre de 2011 fue de 3.000.000. Suponiendo que la tasa del impuesto sobre la renta fue de 30, las ganancias diluidas por acción para el año terminado el 31 de diciembre de 2011, deben ser (redondeadas al centavo más cercano) a. 6.52. segundo. 4.80. do. 4.56. re. 4.00. El 2 de enero de 2011, Mize Co. emitió a par 300.000 de 9 bonos convertibles. Cada bono de 1,000 es convertible en 30 acciones. No se convirtieron bonos durante 2007. Mize tenía 50.000 acciones ordinarias en circulación durante el año 2011. La utilidad neta de Mize s fue de 160.000 y la tasa de impuesto sobre la renta fue de 30. Las ganancias diluidas por acción de Mize para 2011 serían (redondeadas al centavo más cercano) a . 2,71. segundo. 3.03. do. 3,20. re. 3,58. Lerner Co. tenía 200.000 acciones ordinarias, 20.000 acciones preferentes convertibles y 1.000.000 de 10 bonos convertibles en circulación durante 2011. La acción preferente es convertible en 40.000 acciones ordinarias. Durante 2011, Lerner pagó dividendos de .90 por acción sobre las acciones ordinarias y 3.00 por acción sobre las acciones preferentes. Cada bono de 1,000 es convertible en 45 acciones ordinarias. La utilidad neta para 2011 fue de 600.000 y la tasa de impuesto sobre la renta fue de 30. Las ganancias por acción diluidas para 2011 son (redondeadas al centavo más cercano) a. 2.14. segundo. 2,25. do. 2,35. re. 2.46. Yoder, Incorporated, tiene 3.200.000 acciones comunes en circulación el 31 de diciembre de 2010. 800.000 acciones adicionales de acciones ordinarias fueron emitidas el 1 de abril de 2011 y 400.000 más el 1 de julio de 2011. El 1 de octubre de 2011, Yoder emitió 20.000 , 1.000 de valor nominal, 8 bonos convertibles. Cada bono es convertible en 20 acciones ordinarias. Ningún bono se convirtió en acciones ordinarias en 2011. ¿Cuál es el número de acciones que se utilizarán para calcular el beneficio básico por acción y el beneficio diluido por acción, respectivamente a. 4.000.000 y 4.000.000 b. 4.000.000 y 4.100.000 c. 4.000.000 y 4.400.000 d. 4,400,000 y 5,200,000 B. 4,000,000 y 4,100,000 Nolte Co. tiene 4.000.000 de acciones ordinarias en circulación el 31 de diciembre de 2010. 200.000 acciones adicionales se emiten el 1 de abril de 2011 y 480.000 más el 1 de septiembre. El 1 de octubre Nolte emitió 6.000.000 De 9 obligaciones convertibles. Cada bono de 1,000 es convertible en 40 acciones ordinarias. No se han convertido bonos. El número de acciones que se utilizarán para calcular el beneficio básico por acción y el beneficio diluido por acción al 31 de diciembre de 2011 es a. 4.310.000 y 4.310.000. segundo. 4.310.000 y 4.370.000. do. 4.310.000 y 4.550.000. re. 5.080.000 y 5.320.000. segundo. 4.310.000 y 4.370.000. Al 31 de diciembre de 2010, Tatum Company tenía 2.000.000 acciones ordinarias en circulación. El 1 de enero de 2011, Tatum emitió 500.000 acciones de acciones preferentes que eran convertibles en 1.000.000 acciones ordinarias. Durante 2011, Tatum declaró y pagó 1.500.000 dividendos en efectivo sobre las acciones ordinarias y 500.000 dividendos en efectivo sobre las acciones preferentes. El resultado neto del ejercicio finalizado el 31 de diciembre de 2011 fue de 5.000.000. Suponiendo una tasa de impuesto sobre la renta de 30, cuál debe ser la utilidad diluida por acción para el año terminado el 31 de diciembre de 2011 (Redondee al centavo más cercano). A. 1,50 b. 1,67 c. 2,50 d. 2.08 Al 31 de diciembre de 2010, Emley Company tenía 1.200.000 acciones ordinarias en circulación. El 1 de septiembre de 2011, se emitieron 400.000 acciones adicionales. Además, Emley tenía 12.000.000 de 6 bonos convertibles en circulación al 31 de diciembre de 2010, que son convertibles en 800.000 acciones ordinarias. No se convirtieron bonos en acciones ordinarias en 2011. El beneficio neto para el año terminado el 31 de diciembre de 2011 fue de 4.500.000. Suponiendo que la tasa del impuesto sobre la renta fue de 30, cuál debe ser la utilidad diluida por acción para el año terminado el 31 de diciembre de 2011, redondeada al centavo más cercano a. 2.11 b. 3,38 c. 2,35 d. 2.45 Grimm Company tiene 1.800.000 acciones ordinarias en circulación el 31 de diciembre de 2010. Más de 150.000 acciones ordinarias fueron emitidas el 1 de julio de 2011 y 300.000 más el 1 de octubre de 2011. El 1 de abril de 2011, Grimm emitió 6.000, 1.000 de valor nominal, 8 bonos convertibles. Cada bono es convertible en 40 acciones ordinarias. No se convirtieron bonos en acciones ordinarias en 2011. ¿Cuál es el número de acciones que se utilizarán para calcular el beneficio básico por acción y las utilidades diluidas por acción, respectivamente, para el año terminado el 31 de diciembre de 2011 a. 1.950.000 y 2.130.000 b. 1.950.000 y 1.950.000 c. 1.950.000 y 2.190.000 d. 2,250,000 y 2,430,000 A. 1.950.000 y 2.130.000 La información sobre la estructura de capital de Piper Corporation es la siguiente: 31 de diciembre de 2011 2010 Acciones ordinarias 150.000 acciones 150.000 acciones Acciones preferentes convertibles 15.000 acciones 15.000 acciones 9 obligaciones convertibles 2.400.000 2.400.000 Durante 2011, Piper pagó dividendos de 1,20 por acción sobre sus acciones ordinarias y 3,00 por acción sobre sus acciones preferentes. La acción preferida es convertible en 30,000 acciones ordinarias. Los 9 bonos convertibles son convertibles en 75.000 acciones ordinarias. El resultado neto del ejercicio finalizado el 31 de diciembre de 2011 fue de 600.000. Suponga que la tasa de impuesto sobre la renta fue 30. ¿Cuál debe ser la utilidad básica por acción para el año terminado el 31 de diciembre de 2011, redondeada al centavo más cercano a. 2,66 b. 2,92 c. 3,70 d. 4.00 Los warrants que se pueden ejercer a 20 cada uno para obtener 30.000 acciones ordinarias estaban en circulación durante un período en que el precio promedio de mercado de las acciones ordinarias fue de 25. La aplicación del método de autocartera para el ejercicio asumido de estos warrants en el cálculo del beneficio diluido por acción Aumentar el número promedio ponderado de acciones en circulación por a. 30.000. segundo. 24.000. do. 6.000. re. 7.500. Al 31 de diciembre de 2011 y 2010, Miley Corp. tenía 180.000 acciones ordinarias y 10.000 acciones de 5, 100 acciones preferentes acumulativas de valor nominal. No se declararon dividendos en las acciones preferentes o comunes en 2011 o 2010. El beneficio neto para 2011 fue de 400.000. Para 2011, las ganancias por acción ordinaria ascendieron a. 2.22. segundo. 1,94. do. 1,67. re. 1.11. Cuando 5.000.000 de bonos convertibles se emiten a la par con 800.000 en valor de la opción de capital incluido en el bono, el asiento de diario iGAAP incluirá un débito de a. 800.000 a Bonos de Capital Convertible y un crédito a la Prima sobre los Bonos a Pagar. segundo. 800.000 a prima sobre los bonos a pagar y un crédito a los bonos convertibles de capital pagado. do. 800.000 a Descuento sobre los Bonos a Pagar y un crédito a los Bonos Convertibles de Capital Pago. re. 4.200.000 a Efectivo junto con un débito de 800.000 a Descuento sobre los Bonos a Pagar y un crédito a los Bonos Pagables y un crédito a los Bonos Convertibles de Capital Pago. C. 800.000 a Descuento sobre los Bonos a Pagar y un crédito a los Bonos Convertibles de Capital Pago. Con respecto a los contratos que pueden ser liquidados en efectivo o en acciones a. IGAAP requiere que se use la liquidación de acciones. segundo. IGAAP ofrece a las empresas una opción de efectivo o acciones. do. Los US GAAP requieren que se use la liquidación de acciones. re. El proyecto FASB propone que el IASB adopte el enfoque de US GAAP, requiriendo que se use la liquidación de acciones A. iGAAP requiere que se use la liquidación de acciones Con respecto al reconocimiento de la remuneración basada en acciones bajo iGAAP el valor razonable de las acciones y opciones otorgadas a los empleados Se reconoce a. En el primer ejercicio fiscal del servicio de empleados. segundo. Durante los ejercicios fiscales a los que se refieren los servicios de los empleados. do. En el último ejercicio fiscal del servicio de empleados cuando el valor total puede ser calculado. re. Después del último ejercicio fiscal del servicio de empleados cuando se puede calcular el valor total. segundo. A lo largo de los períodos fiscales a los que se refieren los servicios de los empleados Por la última vez: Opciones de compra de acciones son un gasto El tiempo ha llegado a poner fin al debate sobre la contabilidad de las opciones sobre acciones la controversia ha estado pasando demasiado tiempo. De hecho, la norma que rige la presentación de informes sobre las opciones sobre acciones ejecutivas se remonta a 1972, cuando la Junta de Principios de Contabilidad, el predecesor del Consejo de Normas de Contabilidad Financiera (FASB), emitió la APB 25. La regla especificaba que el costo de las opciones en la subvención La fecha debe ser medida por su valor intrínseco la diferencia entre el valor justo de mercado actual de la acción y el precio de ejercicio de la opción. De acuerdo con este método, no se asignó ningún costo a las opciones cuando su precio de ejercicio se fijó al precio de mercado actual. La razón de ser de la regla era bastante simple: como no hay efectivo cambia de manos cuando se hace la concesión, la emisión de una opción de compra de acciones no es una transacción económicamente significativa. Eso es lo que muchos pensaban en ese momento. Lo que es más, poca teoría o práctica estaba disponible en 1972 para guiar a las compañías en la determinación del valor de tales instrumentos financieros no comercializados. APB 25 estaba obsoleto dentro de un año. La publicación en 1973 de la fórmula de Black-Scholes desencadenó un enorme auge en los mercados de opciones negociadas públicamente, un movimiento reforzado por la apertura, también en 1973, del Chicago Board Options Exchange. Ciertamente, no fue casualidad que el crecimiento de los mercados de opciones negociadas se reflejara en un uso cada vez mayor de las concesiones de opciones sobre acciones en la remuneración de ejecutivos y empleados. El National Center for Employee Ownership estima que cerca de 10 millones de empleados recibieron opciones sobre acciones en 2000 menos de 1 millón en 1990. Pronto se hizo evidente tanto en la teoría como en la práctica que las opciones de cualquier tipo valían mucho más que el valor intrínseco definido por APB 25. FASB inició una revisión de la contabilidad de opciones sobre acciones en 1984 y, después de más de una década de acalorada controversia, finalmente publicó el SFAS 123 en octubre de 1995. Recomendó, pero no exigió que las compañías informaran el costo de las opciones concedidas y determinaran su valor justo de mercado Utilizando modelos de precios de opciones. La nueva norma era un compromiso, que reflejaba un intenso cabildeo por parte de empresarios y políticos contra la obligatoriedad de informar. Argumentaron que las opciones de acciones ejecutivas eran uno de los componentes determinantes del renacimiento económico extraordinario de las Américas, por lo que cualquier intento de cambiar las reglas contables para ellos fue un ataque al modelo de gran éxito de América para crear nuevos negocios. Inevitablemente, la mayoría de las empresas optaron por ignorar la recomendación de que se oponían con tanta vehemencia y continuaron registrando sólo el valor intrínseco a la fecha de la concesión, normalmente cero, de sus donaciones de opciones sobre acciones. Posteriormente, el auge extraordinario de los precios de las acciones hizo que los críticos de la opción de gastos de aspecto como spoilsports. Pero desde el choque, el debate ha vuelto con una venganza. La avalancha de escándalos contables corporativos en particular ha revelado lo irreal de un cuadro de su desempeño económico muchas empresas han estado pintando en sus estados financieros. Cada vez más, los inversores y los reguladores han llegado a reconocer que la compensación basada en opciones es un factor de distorsión importante. Si AOL Time Warner en 2001, por ejemplo, informara sobre los gastos de las opciones de acciones de los empleados, según lo recomendado por el SFAS 123, habría mostrado una pérdida operativa de alrededor de 1.700 millones en lugar de los 700 millones de ingresos operativos que reportó. Creemos que el argumento en favor de las opciones de gastos es abrumador y en las páginas siguientes examinamos y rechazamos las principales alegaciones formuladas por quienes continúan oponiéndose a ella. Demostramos que, contrariamente a estos argumentos de expertos, las subvenciones a las opciones de acciones tienen implicaciones reales de flujo de efectivo que deben ser reportadas, que la forma de cuantificar esas implicaciones está disponible, que la divulgación de la nota de pie de página no es un sustituto aceptable para reportar la transacción en el ingreso statement and balance sheet, and that full recognition of option costs need not emasculate the incentives of entrepreneurial ventures. We then discuss just how firms might go about reporting the cost of options on their income statements and balance sheets. Fallacy 1: Stock Options Do Not Represent a Real Cost It is a basic principle of accounting that financial statements should record economically significant transactions. No one doubts that traded options meet that criterion billions of dollars worth are bought and sold every day, either in the over-the-counter market or on exchanges. For many people, though, company stock option grants are a different story. These transactions are not economically significant, the argument goes, because no cash changes hands. As former American Express CEO Harvey Golub put it in an August 8, 2002, Wall Street Journal article, stock option grants are never a cost to the company and, therefore, should never be recorded as a cost on the income statement. That position defies economic logic, not to mention common sense, in several respects. For a start, transfers of value do not have to involve transfers of cash. While a transaction involving a cash receipt or payment is sufficient to generate a recordable transaction, it is not necessary. Events such as exchanging stock for assets, signing a lease, providing future pension or vacation benefits for current-period employment, or acquiring materials on credit all trigger accounting transactions because they involve transfers of value, even though no cash changes hands at the time the transaction occurs. Even if no cash changes hands, issuing stock options to employees incurs a sacrifice of cash, an opportunity cost, which needs to be accounted for. If a company were to grant stock, rather than options, to employees, everyone would agree that the companys cost for this transaction would be the cash it otherwise would have received if it had sold the shares at the current market price to investors. It is exactly the same with stock options. When a company grants options to employees, it forgoes the opportunity to receive cash from underwriters who could take these same options and sell them in a competitive options market to investors. Warren Buffett made this point graphically in an April 9, 2002, Washington Post column when he stated: Berkshire Hathaway will be happy to receive options in lieu of cash for many of the goods and services that we sell corporate America. Granting options to employees rather than selling them to suppliers or investors via underwriters involves an actual loss of cash to the firm. It can, of course, be more reasonably argued that the cash forgone by issuing options to employees, rather than selling them to investors, is offset by the cash the company conserves by paying its employees less cash. As two widely respected economists, Burton G. Malkiel and William J. Baumol, noted in an April 4, 2002, Wall Street Journal article: A new, entrepreneurial firm may not be able to provide the cash compensation needed to attract outstanding workers. Instead, it can offer stock options. But Malkiel and Baumol, unfortunately, do not follow their observation to its logical conclusion. For if the cost of stock options is not universally incorporated into the measurement of net income, companies that grant options will underreport compensation costs, and it wont be possible to compare their profitability, productivity, and return-on-capital measures with those of economically equivalent companies that have merely structured their compensation system in a different way. The following hypothetical illustration shows how that can happen. Imagine two companies, KapCorp and MerBod, competing in exactly the same line of business. The two differ only in the structure of their employee compensation packages. KapCorp pays its workers 400,000 in total compensation in the form of cash during the year. At the beginning of the year, it also issues, through an underwriting, 100,000 worth of options in the capital market, which cannot be exercised for one year, and it requires its employees to use 25 of their compensation to buy the newly issued options. The net cash outflow to KapCorp is 300,000 (400,000 in compensation expense less 100,000 from the sale of the options). MerBods approach is only slightly different. It pays its workers 300,000 in cash and issues them directly 100,000 worth of options at the start of the year (with the same one-year exercise restriction). Economically, the two positions are identical. Each company has paid a total of 400,000 in compensation, each has issued 100,000 worth of options, and for each the net cash outflow totals 300,000 after the cash received from issuing the options is subtracted from the cash spent on compensation. Employees at both companies are holding the same 100,000 of options during the year, producing the same motivation, incentive, and retention effects. How legitimate is an accounting standard that allows two economically identical transactions to produce radically different numbers In preparing its year-end statements, KapCorp will book compensation expense of 400,000 and will show 100,000 in options on its balance sheet in a shareholder equity account. If the cost of stock options issued to employees is not recognized as an expense, however, MerBod will book a compensation expense of only 300,000 and not show any options issued on its balance sheet. Assuming otherwise identical revenues and costs, it will look as though MerBods earnings were 100,000 higher than KapCorps. MerBod will also seem to have a lower equity base than KapCorp, even though the increase in the number of shares outstanding will eventually be the same for both companies if all the options are exercised. As a result of the lower compensation expense and lower equity position, MerBods performance by most analytic measures will appear to be far superior to KapCorps. This distortion is, of course, repeated every year that the two firms choose the different forms of compensation. How legitimate is an accounting standard that allows two economically identical transactions to produce radically different numbers Fallacy 2: The Cost of Employee Stock Options Cannot Be Estimated Some opponents of option expensing defend their position on practical, not conceptual, grounds. Option-pricing models may work, they say, as a guide for valuing publicly traded options. But they cant capture the value of employee stock options, which are private contracts between the company and the employee for illiquid instruments that cannot be freely sold, swapped, pledged as collateral, or hedged. It is indeed true that, in general, an instruments lack of liquidity will reduce its value to the holder. But the holders liquidity loss makes no difference to what it costs the issuer to create the instrument unless the issuer somehow benefits from the lack of liquidity. And for stock options, the absence of a liquid market has little effect on their value to the holder. The great beauty of option-pricing models is that they are based on the characteristics of the underlying stock. Thats precisely why they have contributed to the extraordinary growth of options markets over the last 30 years. The Black-Scholes price of an option equals the value of a portfolio of stock and cash that is managed dynamically to replicate the payoffs to that option. With a completely liquid stock, an otherwise unconstrained investor could entirely hedge an options risk and extract its value by selling short the replicating portfolio of stock and cash. In that case, the liquidity discount on the options value would be minimal. And that applies even if there were no market for trading the option directly. Therefore, the liquidityor lack thereofof markets in stock options does not, by itself, lead to a discount in the options value to the holder. Investment banks, commercial banks, and insurance companies have now gone far beyond the basic, 30-year-old Black-Scholes model to develop approaches to pricing all sorts of options: Standard ones. Exotic ones. Options traded through intermediaries, over the counter, and on exchanges. Options linked to currency fluctuations. Options embedded in complex securities such as convertible debt, preferred stock, or callable debt like mortgages with prepay features or interest rate caps and floors. A whole subindustry has developed to help individuals, companies, and money market managers buy and sell these complex securities. Current financial technology certainly permits firms to incorporate all the features of employee stock options into a pricing model. A few investment banks will even quote prices for executives looking to hedge or sell their stock options prior to vesting, if their companys option plan allows it. Of course, formula-based or underwriters estimates about the cost of employee stock options are less precise than cash payouts or share grants. But financial statements should strive to be approximately right in reflecting economic reality rather than precisely wrong. Managers routinely rely on estimates for important cost items, such as the depreciation of plant and equipment and provisions against contingent liabilities, such as future environmental cleanups and settlements from product liability suits and other litigation. When calculating the costs of employees pensions and other retirement benefits, for instance, managers use actuarial estimates of future interest rates, employee retention rates, employee retirement dates, the longevity of employees and their spouses, and the escalation of future medical costs. Pricing models and extensive experience make it possible to estimate the cost of stock options issued in any given period with a precision comparable to, or greater than, many of these other items that already appear on companies income statements and balance sheets. Not all the objections to using Black-Scholes and other option valuation models are based on difficulties in estimating the cost of options granted. For example, John DeLong, in a June 2002 Competitive Enterprise Institute paper entitled The Stock Options Controversy and the New Economy, argued that even if a value were calculated according to a model, the calculation would require adjustment to reflect the value to the employee. He is only half right. By paying employees with its own stock or options, the company forces them to hold highly non-diversified financial portfolios, a risk further compounded by the investment of the employees own human capital in the company as well. Since almost all individuals are risk averse, we can expect employees to place substantially less value on their stock option package than other, better-diversified, investors would. Estimates of the magnitude of this employee risk discountor deadweight cost, as it is sometimes calledrange from 20 to 50, depending on the volatility of the underlying stock and the degree of diversification of the employees portfolio. The existence of this deadweight cost is sometimes used to justify the apparently huge scale of option-based remuneration handed out to top executives. A company seeking, for instance, to reward its CEO with 1 million in options that are worth 1,000 each in the market may (perhaps perversely) reason that it should issue 2,000 rather than 1,000 options because, from the CEOs perspective, the options are worth only 500 each. (We would point out that this reasoning validates our earlier point that options are a substitute for cash.) But while it might arguably be reasonable to take deadweight cost into account when deciding how much equity-based compensation (such as options) to include in an executives pay packet, it is certainly not reasonable to let dead-weight cost influence the way companies record the costs of the packets. Financial statements reflect the economic perspective of the company, not the entities (including employees) with which it transacts. When a company sells a product to a customer, for example, it does not have to verify what the product is worth to that individual. It counts the expected cash payment in the transaction as its revenue. Similarly, when the company purchases a product or service from a supplier, it does not examine whether the price paid was greater or less than the suppliers cost or what the supplier could have received had it sold the product or service elsewhere. The company records the purchase price as the cash or cash equivalent it sacrificed to acquire the good or service. Suppose a clothing manufacturer were to build a fitness center for its employees. The company would not do so to compete with fitness clubs. It would build the center to generate higher revenues from increased productivity and creativity of healthier, happier employees and to reduce costs arising from employee turnover and illness. The cost to the company is clearly the cost of building and maintaining the facility, not the value that the individual employees might place on it. The cost of the fitness center is recorded as a periodic expense, loosely matched to the expected revenue increase and reductions in employee-related costs. The only reasonable justification we have seen for costing executive options below their market value stems from the observation that many options are forfeited when employees leave, or are exercised too early because of employees risk aversion. In these cases, existing shareholders equity is diluted less than it would otherwise be, or not at all, consequently reducing the companys compensation cost. While we agree with the basic logic of this argument, the impact of forfeiture and early exercise on theoretical values may be grossly exaggerated. (See The Real Impact of Forfeiture and Early Exercise at the end of this article.) The Real Impact of Forfeiture and Early Exercise Unlike cash salary, stock options cannot be transferred from the individual granted them to anyone else. Nontransferability has two effects that combine to make employee options less valuable than conventional options traded in the market. First, employees forfeit their options if they leave the company before the options have vested. Second, employees tend to reduce their risk by exercising vested stock options much earlier than a well-diversified investor would, thereby reducing the potential for a much higher payoff had they held the options to maturity. Employees with vested options that are in the money will also exercise them when they quit, since most companies require employees to use or lose their options upon departure. In both cases, the economic impact on the company of issuing the options is reduced, since the value and relative size of existing shareholders stakes are diluted less than they could have been, or not at all. Recognizing the increasing probability that companies will be required to expense stock options, some opponents are fighting a rearguard action by trying to persuade standard setters to significantly reduce the reported cost of those options, discounting their value from that measured by financial models to reflect the strong likelihood of forfeiture and early exercise. Current proposals put forth by these people to FASB and IASB would allow companies to estimate the percentage of options forfeited during the vesting period and reduce the cost of option grants by this amount. Also, rather than use the expiration date for the option life in an option-pricing model, the proposals seek to allow companies to use an expected life for the option to reflect the likelihood of early exercise. Using an expected life (which companies may estimate at close to the vesting period, say, four years) instead of the contractual period of, say, ten years, would significantly reduce the estimated cost of the option. Some adjustment should be made for forfeiture and early exercise. But the proposed method significantly overstates the cost reduction since it neglects the circumstances under which options are most likely to be forfeited or exercised early. When these circumstances are taken into account, the reduction in employee option costs is likely to be much smaller. First, consider forfeiture. Using a flat percentage for forfeitures based on historical or prospective employee turnover is valid only if forfeiture is a random event, like a lottery, independent of the stock price. In reality, however, the likelihood of forfeiture is negatively related to the value of the options forfeited and, hence, to the stock price itself. People are more likely to leave a company and forfeit options when the stock price has declined and the options are worth little. But if the firm has done well and the stock price has increased significantly since grant date, the options will have become much more valuable, and employees will be much less likely to leave. If employee turnover and forfeiture are more likely when the options are least valuable, then little of the options total cost at grant date is reduced because of the probability of forfeiture. The argument for early exercise is similar. It also depends on the future stock price. Employees will tend to exercise early if most of their wealth is bound up in the company, they need to diversify, and they have no other way to reduce their risk exposure to the companys stock price. Senior executives, however, with the largest option holdings, are unlikely to exercise early and destroy option value when the stock price has risen substantially. Often they own unrestricted stock, which they can sell as a more efficient means to reduce their risk exposure. Or they have enough at stake to contract with an investment bank to hedge their option positions without exercising prematurely. As with the forfeiture feature, the calculation of an expected option life without regard to the magnitude of the holdings of employees who exercise early, or to their ability to hedge their risk through other means, would significantly underestimate the cost of options granted. Option-pricing models can be modified to incorporate the influence of stock prices and the magnitude of employees option and stock holdings on the probabilities of forfeiture and early exercise. (See, for example, Mark Rubinsteins Fall 1995 article in the Journal of Derivatives . On the Accounting Valuation of Employee Stock Options.) The actual magnitude of these adjustments needs to be based on specific company data, such as stock price appreciation and distribution of option grants among employees. The adjustments, properly assessed, could turn out to be significantly smaller than the proposed calculations (apparently endorsed by FASB and IASB) would produce. Indeed, for some companies, a calculation that ignores forfeiture and early exercise altogether could come closer to the true cost of options than one that entirely ignores the factors that influence employees forfeiture and early exercise decisions. Fallacy 3: Stock Option Costs Are Already Adequately Disclosed Another argument in defense of the existing approach is that companies already disclose information about the cost of option grants in the footnotes to the financial statements. Investors and analysts who wish to adjust income statements for the cost of options, therefore, have the necessary data readily available. We find that argument hard to swallow. As we have pointed out, it is a fundamental principle of accounting that the income statement and balance sheet should portray a companys underlying economics. Relegating an item of such major economic significance as employee option grants to the footnotes would systematically distort those reports. But even if we were to accept the principle that footnote disclosure is sufficient, in reality we would find it a poor substitute for recognizing the expense directly on the primary statements. For a start, investment analysts, lawyers, and regulators now use electronic databases to calculate profitability ratios based on the numbers in companies audited income statements and balance sheets. An analyst following an individual company, or even a small group of companies, could make adjustments for information disclosed in footnotes. But that would be difficult and costly to do for a large group of companies that had put different sorts of data in various nonstandard formats into footnotes. Clearly, it is much easier to compare companies on a level playing field, where all compensation expenses have been incorporated into the income numbers. Whats more, numbers divulged in footnotes can be less reliable than those disclosed in the primary financial statements. For one thing, executives and auditors typically review supplementary footnotes last and devote less time to them than they do to the numbers in the primary statements. As just one example, the footnote in eBays FY 2000 annual report reveals a weighted average grant-date fair value of options granted during 1999 of 105.03 for a year in which the weighted average exercise price of shares granted was 64.59. Just how the value of options granted can be 63 more than the value of the underlying stock is not obvious. In FY 2000, the same effect was reported: a fair value of options granted of 103.79 with an average exercise price of 62.69. Apparently, this error was finally detected, since the FY 2001 report retroactively adjusted the 1999 and 2000 average grant-date fair values to 40.45 and 41.40, respectively. We believe executives and auditors will exert greater diligence and care in obtaining reliable estimates of the cost of stock options if these figures are included in companies income statements than they currently do for footnote disclosure. Our colleague William Sahlman in his December 2002 HBR article, Expensing Options Solves Nothing, has expressed concern that the wealth of useful information contained in the footnotes about the stock options granted would be lost if options were expensed. But surely recognizing the cost of options in the income statement does not preclude continuing to provide a footnote that explains the underlying distribution of grants and the methodology and parameter inputs used to calculate the cost of the stock options. Some critics of stock option expensing argue, as venture capitalist John Doerr and FedEx CEO Frederick Smith did in an April 5, 2002, New York Times column, that if expensing were required, the impact of options would be counted twice in the earnings per share: first as a potential dilution of the earnings, by increasing the shares outstanding, and second as a charge against reported earnings. The result would be inaccurate and misleading earnings per share. We have several difficulties with this argument. First, option costs only enter into a (GAAP-based) diluted earnings-per-share calculation when the current market price exceeds the option exercise price. Thus, fully diluted EPS numbers still ignore all the costs of options that are nearly in the money or could become in the money if the stock price increased significantly in the near term. Second, relegating the determination of the economic impact of stock option grants solely to an EPS calculation greatly distorts the measurement of reported income, would not be adjusted to reflect the economic impact of option costs. These measures are more significant summaries of the change in economic value of a company than the prorated distribution of this income to individual shareholders revealed in the EPS measure. This becomes eminently clear when taken to its logical absurdity: Suppose companies were to compensate all their suppliersof materials, labor, energy, and purchased serviceswith stock options rather than with cash and avoid all expense recognition in their income statement. Their income and their profitability measures would all be so grossly inflated as to be useless for analytic purposes only the EPS number would pick up any economic effect from the option grants. Our biggest objection to this spurious claim, however, is that even a calculation of fully diluted EPS does not fully reflect the economic impact of stock option grants. The following hypothetical example illustrates the problems, though for purposes of simplicity we will use grants of shares instead of options. The reasoning is exactly the same for both cases. Lets say that each of our two hypothetical companies, KapCorp and MerBod, has 8,000 shares outstanding, no debt, and annual revenue this year of 100,000. KapCorp decides to pay its employees and suppliers 90,000 in cash and has no other expenses. MerBod, however, compensates its employees and suppliers with 80,000 in cash and 2,000 shares of stock, at an average market price of 5 per share. The cost to each company is the same: 90,000. But their net income and EPS numbers are very different. KapCorps net income before taxes is 10,000, or 1.25 per share. By contrast, MerBods reported net income (which ignores the cost of the equity granted to employees and suppliers) is 20,000, and its EPS is 2.00 (which takes into account the new shares issued). Of course, the two companies now have different cash balances and numbers of shares outstanding with a claim on them. But KapCorp can eliminate that discrepancy by issuing 2,000 shares of stock in the market during the year at an average selling price of 5 per share. Now both companies have closing cash balances of 20,000 and 10,000 shares outstanding. Under current accounting rules, however, this transaction only exacerbates the gap between the EPS numbers. KapCorps reported income remains 10,000, since the additional 10,000 value gained from the sale of the shares is not reported in net income, but its EPS denominator has increased from 8,000 to 10,000. Consequently, KapCorp now reports an EPS of 1.00 to MerBods 2.00, even though their economic positions are identical: 10,000 shares outstanding and increased cash balances of 20,000. The people claiming that options expensing creates a double-counting problem are themselves creating a smoke screen to hide the income-distorting effects of stock option grants. The people claiming that options expensing creates a double-counting problem are themselves creating a smoke screen to hide the income-distorting effects of stock option grants. Indeed, if we say that the fully diluted EPS figure is the right way to disclose the impact of share options, then we should immediately change the current accounting rules for situations when companies issue common stock, convertible preferred stock, or convertible bonds to pay for services or assets. At present, when these transactions occur, the cost is measured by the fair market value of the consideration involved. Why should options be treated differently Fallacy 4: Expensing Stock Options Will Hurt Young Businesses Opponents of expensing options also claim that doing so will be a hardship for entrepreneurial high-tech firms that do not have the cash to attract and retain the engineers and executives who translate entrepreneurial ideas into profitable, long-term growth. This argument is flawed on a number of levels. For a start, the people who claim that option expensing will harm entrepreneurial incentives are often the same people who claim that current disclosure is adequate for communicating the economics of stock option grants. The two positions are clearly contradictory. If current disclosure is sufficient, then moving the cost from a footnote to the balance sheet and income statement will have no market effect. But to argue that proper costing of stock options would have a significant adverse impact on companies that make extensive use of them is to admit that the economics of stock options, as currently disclosed in footnotes, are not fully reflected in companies market prices. More seriously, however, the claim simply ignores the fact that a lack of cash need not be a barrier to compensating executives. Rather than issuing options directly to employees, companies can always issue them to underwriters and then pay their employees out of the money received for those options. Considering that the market systematically puts a higher value on options than employees do, companies are likely to end up with more cash from the sale of externally issued options (which carry with them no deadweight costs) than they would by granting options to employees in lieu of higher salaries. Even privately held companies that raise funds through angel and venture capital investors can take this approach. The same procedures used to place a value on a privately held company can be used to estimate the value of its options, enabling external investors to provide cash for options about as readily as they provide cash for stock. Thats not to say, of course, that entrepreneurs should never get option grants. Venture capital investors will always want employees to be compensated with some stock options in lieu of cash to be assured that the employees have some skin in the game and so are more likely to be honest when they tout their companys prospects to providers of new capital. But that does not preclude also raising cash by selling options externally to pay a large part of the cash compensation to employees. We certainly recognize the vitality and wealth that entrepreneurial ventures, particularly those in the high-tech sector, bring to the U. S. economy. A strong case can be made for creating public policies that actively assist these companies in their early stages, or even in their more established stages. The nation should definitely consider a regulation that makes entrepreneurial, job-creating companies healthier and more competitive by changing something as simple as an accounting journal entry. But we have to question the effectiveness of the current rule, which essentially makes the benefits from a deliberate accounting distortion proportional to companies use of one particular form of employee compensation. After all, some entrepreneurial, job-creating companies might benefit from picking other forms of incentive compensation that arguably do a better job of aligning executive and shareholder interests than conventional stock options do. Indexed or performance options, for example, ensure that management is not rewarded just for being in the right place at the right time or penalized just for being in the wrong place at the wrong time. A strong case can also be made for the superiority of properly designed restricted stock grants and deferred cash payments. Yet current accounting standards require that these, and virtually all other compensation alternatives, be expensed. Are companies that choose those alternatives any less deserving of an accounting subsidy than Microsoft, which, having granted 300 million options in 2001 alone, is by far the largest issuer of stock options A less distorting approach for delivering an accounting subsidy to entrepreneurial ventures would simply be to allow them to defer some percentage of their total employee compensation for some number of years, which could be indefinitelyjust as companies granting stock options do now. That way, companies could get the supposed accounting benefits from not having to report a portion of their compensation costs no matter what form that compensation might take. What Will Expensing Involve Although the economic arguments in favor of reporting stock option grants on the principal financial statements seem to us to be overwhelming, we do recognize that expensing poses challenges. For a start, the benefits accruing to the company from issuing stock options occur in future periods, in the form of increased cash flows generated by its option motivated and retained employees. The fundamental matching principle of accounting requires that the costs of generating those higher revenues be recognized at the same time the revenues are recorded. This is why companies match the cost of multiperiod assets such as plant and equipment with the revenues these assets produce over their economic lives. In some cases, the match can be based on estimates of the future cash flows. In expensing capitalized software-development costs, for instance, managers match the costs against a predicted pattern of benefits accrued from selling the software. In the case of options, however, managers would have to estimate an equivalent pattern of benefits arising from their own decisions and activities. That would likely introduce significant measurement error and provide opportunities for managers to bias their estimates. We therefore believe that using a standard straight-line amortization formula will reduce measurement error and management bias despite some loss of accuracy. The obvious period for the amortization is the useful economic life of the granted option, probably best measured by the vesting period. Thus, for an option vesting in four years, 1/48 of the cost of the option would be expensed through the income statement in each month until the option vests. This would treat employee option compensation costs the same way the costs of plant and equipment or inventory are treated when they are acquired through equity instruments, such as in an acquisition. In addition to being reported on the income statement, the option grant should also appear on the balance sheet. In our opinion, the cost of options issued represents an increase in shareholders equity at the time of grant and should be reported as paid-in capital. Some experts argue that stock options are more like contingent liability than equity transactions since their ultimate cost to the company cannot be determined until employees either exercise or forfeit their options. This argument, of course, ignores the considerable economic value the company has sacrificed at time of grant. Whats more, a contingent liability is usually recognized as an expense when it is possible to estimate its value and the liability is likely to be incurred. At time of grant, both these conditions are met. The value transfer is not just probable it is certain. The company has granted employees an equity security that could have been issued to investors and suppliers who would have given cash, goods, and services in return. The amount sacrificed can also be estimated, using option-pricing models or independent estimates from investment banks. There has to be, of course, an offsetting entry on the asset side of the balance sheet. FASB, in its exposure draft on stock option accounting in 1994, proposed that at time of grant an asset called prepaid compensation expense be recognized, a recommendation we endorse. FASB, however, subsequently retracted its proposal in the face of criticism that since employees can quit at any time, treating their deferred compensation as an asset would violate the principle that a company must always have legal control over the assets it reports. We feel that FASB capitulated too easily to this argument. The firm does have an asset because of the option grantpresumably a loyal, motivated employee. Even though the firm does not control the asset in a legal sense, it does capture the benefits. FASBs concession on this issue subverted substance to form. Finally, there is the issue of whether to allow companies to revise the income number theyve reported after the grants have been issued. Some commentators argue that any recorded stock option compensation expense should be reversed if employees forfeit the options by leaving the company before vesting or if their options expire unexercised. But if companies were to mark compensation expense downward when employees forfeit their options, should they not also mark it up when the share price rises, thereby increasing the market value of the options Clearly, this can get complicated, and it comes as no surprise that neither FASB nor IASB recommends any kind of postgrant accounting revisions, since that would open up the question of whether to use mark-to-market accounting for all types of assets and liabilities, not just share options. At this time, we dont have strong feelings about whether the benefits from mark-to-market accounting for stock options exceed the costs. But we would point out that people who object to estimating the cost of options granted at time of issue should be even less enthusiastic about reestimating their options cost each quarter. We recognize that options are a powerful incentive, and we believe that all companies should consider them in deciding how to attract and retain talent and align the interests of managers and owners. But we also believe that failing to record a transaction that creates such powerful effects is economically indefensible and encourages companies to favor options over alternative compensation methods. It is not the proper role of accounting standards to distort executive and employee compensation by subsidizing one form of compensation relative to all others. Companies should choose compensation methods according to their economic benefitsnot the way they are reported. It is not the proper role of accounting standards to distort executive and employee compensation by subsidizing one form of compensation relative to all others. A version of this article appeared in the March 2003 issue of Harvard Business Review. The popular position of 8220expensing stock options8221 may not be a panacea to corporate governance. In the following issue of GBR (Vol 6, No. 1) Professor Steve Ferraro argues for the opposing view that options should be expensed. To read that side of the argument go to 8220Recognize the True Cost of Compensation: Expensing Options Increases Transparency in Financial Reporting. 8220 In the post-Enron era it has become very popular to propose the requirement that companies record an expense at the time a stock option is awarded. The author has closely followed the Financial Accounting Standards Board8217s actions related to this subject since 1991 and has consistently taken the minority position that holds that expensing is NOT appropriate. There are two issues surrounding the recording of an expense when an option is awarded: Does the expensing provide a level playing field in accounting for management compensation Would the recording of an expense when an option is awarded improve corporate governance Background In 1991 the Financial Accounting Standards Board (FASB) floated a draft of a proposed new accounting standard. FASB indicated that a level playing field did not exist in the reporting of management incentive compensation. Companies that rewarded management with cash bonuses were required to report a compensation expense for the amount of the bonus paid, thereby reducing net income. In contrast, FASB stated, companies that rewarded management with stock options did not have a comparable reduction in net income. FASB8217s proposal was that, at the time a company awarded a stock option to an employee, it record an expense for the 8220fair value of the option8221. The method of calculation was not to be mandated. However, the method most often suggested since 1991 has been the Black-Scholes Option Pricing Model. This Model was developed in 1973 and consists of a set of algebraic equations. It has been used by many option traders. In essence, FASB was saying that, if the company sold the option in the public market, it would receive a cash payment from the buyer. By giving the option to the employee, the company was foregoing the cash it would receive if it sold the option. The 8220fair value8221 of the option, as determined by the Black-Scholes Model, or some other valuation model, should therefore be recorded as an expense. Subsequent to the floating of the draft proposal by FASB in 1991, many hi-tech companies voiced strong objection. These companies argued that employee stock options were the primary incentive they had to recruit technology professionals and to motivate various levels of employees. The opposition by technology companies did not immediately influence FASB, and the development of a proposed standard requiring expensing continued. At that point hi-tech companies began contacting their Congressional representatives. Many members of Congress sided with the hi-tech companies and moved to have FASB back off on FASB Statement 123. When FASB failed to bend, members of Congress took an extremely aggressive posture on this matter 8212 to the point that the existence of FASB as an independent standard setter was threatened. In repose to this threat, FASB Statement 123 was revised to require only footnote disclosure of the pro forma effect on net income and earnings per share if an expense had been recorded. Recent Events In the post-Enron era, FASB8217s early 19908217s posture on the 8220expensing of stock options8221 has been resurrected. The concept of a level playing field has been supplemented with a new rationale for recording the expense. This rationale starts with the premise that companies such as Enron, Global Crossing, and WorldCom used accounting treatments that were improper and unethical in order to inflate net income and earnings per share. These company executives were motivated to increase the stock price because it would be financially rewarding to the management since they held substantial options on the stock. If the companies had been required to record an expense at the time the option was granted, they would not have been so generous with the options. By curtailing the options, the incentive to inflate net income and earning per share would have been reduced. Pros and Cons Oof 8220Expensing Stock Options8221 Several arguments have been made, both pro and con, regarding this issue. Following is a summary of the key arguments on both sides. Expensing options will provide a level playing field so that companies that use cash bonuses and companies that use stock options each have an expense on the income statement. It will improve corporate governance by reducing or eliminating incentives to inflate income and earnings per share. The playing field is already level. A company using cash bonuses as management incentive compensation has a reduction in net income and a resultant reduction in earnings per share. When a stock option has been awarded and the strike price is in the money, the additional shares become outstanding for purposes of calculating earnings per share. Since earnings per share is calculated by dividing net income by weighted average shares outstanding, as the shares outstanding increase, the earnings per share decrease. To require a company to record an expense for the option, and subsequently increase the shares outstanding is a double hit to earnings per share. Regarding improved corporate governance, it is difficult to believe that the management or the Board of Directors of Enron would have limited the number of options simply because of the requirement to record an expense. Management that is truly unscrupulous is concerned strictly about personal gain and not about the company8217s income statement. During recent years, each time that earnings management is scrutinized, analysts regularly state, 8220follow the cash.8221 Ignore entries that are purely accounting and have no cash impact. Such is the nature of recording an expense when an option is awarded. This is an accounting entry with no cash impact. It is very likely that analysts will remove the option expense from the income statement to obtain a clear view of the company8217s performance. This would likely lead to companies including a pro forma income statement which excluded the option expense. As a footnote to the 8220follow the cash8221 guideline, it is interesting to note that, not only is there no cash impact from the expense option, there is positive cash flow to the company. At the time the option is exercised, the employee must pay for the shares received. Hi-tech companies have traditionally issued options to multiple levels of employees with two purposes in mind: attract high quality employees to the company and motivate workers at all levels. If hi-tech companies were required to record an expense at the time options are granted, many employees at all levels would most likely lose the options. Conclusion With regard to FASB8217s original position, there appears to be no reason to make the proposed change in order to provide a level playing field. As to the improved corporate governance argument for the change, the Securities and Exchange Commission certainly has just cause to seek improvements in corporate governance. However, there are ways of accomplishing this without creating controversial accounting requirements and penalizing employees below the top level of management. There are more effective ways to accomplish this than the FASB proposal on expensing options. Two suggested methods of dealing with options that could improve corporate governance are: The SEC could place a limit on the percentage of a company8217s options that could be issued to the top three people in the company. The SEC could require that the top three people in the company be issued options on restricted stock (often called 8220letter stock8221 or Rule 141 stock). This stock must be held for two years before it can be sold. For additional views on the subject of expensing stock options, please refer to the following Wall Street Journal articles: 8220The Real Value of Options,8221 Harvey Golub, August 8, 2002 8220The Options-Accounting Sideshow,8221 Robert L. Bartley, July 29, 2002
No comments:
Post a Comment