Debate the thoeries of Accounting for stock options Research Paper

Debate the thoeries of Accounting for stock options - Research Paper Example Fair value model, lattice model and finally minimum value method which is based upon the someone’s willingness to purchase a call option on a share of stock at the current fair value of the stock with the right to postpone payment of the exercise until the end of the options period, ignoring the volatility of the underlying stock in valuation calculation. This has necessitated the emergence of alternative incentive methods to premium cash thus employee stock options. Any stock option with exercise price higher than the price of the underlying stocks at the exercise date are exchanged for new ones with lower exercise price because companies have to account for the stock issued to their employees. But the companies have to account for them although they do not incur any costs to grant the options. Guides and standards on how such transactions are accounted for in the books of the company have to be provided. Stock option compensation that needs to be looked at is the backdating of employee stock option and how it affects the company. Agency theory argues that compensation policy should provide management with incentives to select and implement actions that add shareholder wealth. Discussion Pertaining the use of the intrinsic value method of accounting for stock options, a company is to value stock options based on their intrinsic value at that juncture they were granted. Intrinsic value refers to the difference between the stock’s market price on the grant date and also including the exercise price at which the employees can use the option to purchase stock. Incase the stock’s market price is slightly higher than the option exercise price, therefore, the stock option’s value is the difference between the two. Realizing the shortcomings of the method there is need to look for a more comprehensive and efficient method of stock options .By using this method it will result in no compensation expense since we grant employees options with e xercise prices same as the fair market value of the underlying stock at the time of the grant. Fair value was encouraged to be used but it was not a mandatory requirement to be used by the companies as stipulated by the Financial Accounting Standards Board (FASB). The fair value accounting approach valued stock options basing on various factors that establish the underlying value. This is because the companies are to outlay for option grants based on the fair value of the options that were expected to vest on the date it granted them. In December 2004, FASB issued a Statement of Financial Accounting Standards (Statement) No. 123(R), Share-Based Payment. Statement 123(R) replaced Statement 123, Accounting for Stock-Based Compensation, and was consequently effective for public companies as of July 1, 2005. It was effective for non-public companies as of January 1, 2006. The company had an option of either using Black-Schole option pricing model or the binomial option so as to come up with the options fair value. However, if the company continues with the intrinsic value of the approach they required to avail additional closure in the footnotes to their financial on what the expenses would have been with fair value approach. Under Statement 123, the company is only allowed to disclose information on the effects

What effects does parental involvement have on low income families or Annotated Bibliography

What effects does parental involvement have on low income families or Does parental involement have an effect on educational achievement - Annotated Bibliography Example including economic demographics, genetic predispositions, overall intelligence, and social factors, like parental involvement. The latter is a fascinating element. A parent’s active involvement in their children’s schooling can have a profound positive impact. There is however, a balance that needs to be achieved; after all too much parental involvement can be detrimental, depending on how that involvement is applied. The articles reviewed for this discussion allow for a thorough and balanced perspective on the topic. These sources, as a whole, were not particularly difficult to obtain. Google search provided a number of online accessible journal sources, simply, by applying the keywords, â€Å"parental involvement and student achievement.† Combined together these sources give a broader area of research and contributes to understanding of the relevant facts and allow for an unbiased viewpoint to answer the applicable questions of this issue. This article intended to determine how relevant parental involvement, or lack of, truly has on elementary school age children in the 1st, 3rd and 5th grades. The authors propose that, although, the immense amount of research has shown that parental involvement is imperative, hugely impactful, and should be encouraged, most research cannot say with absolutely certainty that involvement effects overall academic achievement.(El Nokali, Bachman & Votruba-Drzal, 2010) There is a definite correlation between less â€Å"bad† classroom behavior due to parental involvement and can aid in social development, but not directly on academic achievement. This article is a very interesting source. It is useful in that it approaches the correlation between parental involvement and academic achievement with a skeptical eye. Parental involvement is important and should be recommended, but it may not be a guarantor that it will ensure a