Stock Option Plans and The Issuance of Debt
Compare the two (2) main accounting issues associated with stock option plans. Make one (1) recommendation to FASB for overcoming obstacles in accounting for stock option plans. Provide one (1) specific example of the way in which your recommendation could improve the accounting for stock option plans.
Suppose management is in need of large sums of cash to finance the construction of a new manufacturing plant and is considering issuing debt to obtain the cash. However, management is unsure of whether to issue convertible debt or debt issued with stock warrants. You are the senior accountant at your company, and management has asked for your help. Explain the similarities and differences between convertible debt and debt issued with stock warrants. Also, recommend to management the type of debt which it should issue. Provide a rationale for your recommendation
……………..Answer Preview…………….
The stock option plan is used by companies in ensuring the welfare of its employees. This plan may be used as an incentive to attract employees and at the same time it may be used as compensation for work done by employees. Most organizations use the stock exchange plan for their managers and directors but some extend this plan to their employees (Terry, and Conference Board in Canada, 2005).
Despite the fact that the stock option plan is a desirable incentive to employees, it may bring about several accounting…..
APA
453 words
