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21-09-2014, 12:07 AM
hi, have two follow up questions here, would be great if anyone can provide some op/ans. sry ts hijack ur post abit.
(i) Proceeds from exercise of share options by employees, the accounting entries would be
Debit Cash Credit Common stock (at par value) + Additional Paid in Capital (at the difference between the exercise price and par value). Is this correct?
(ii) I have read about this line item in US-listed companies' cash flow statement called Excess tax benefits on Stock-based compensation. It seems to me that it's sth that arise when Co record stock based comp expense (upon granting of options) at fair value derived from black scholes model. Whereas for tax accounting purposes, the stock option is only tax deductible afterwards upon actual exercise of the options (and very often this is after some time upon granting of option, and therefore the share price rose). I read that the full market value of the share price upon exercise of stock option by employee is then tax deductible. Is this correct? and also does anyone have experience modelling for stock-based compensation/tax impact of stock based compensation in DCF model?? mind sharing how to do it right?
Thanks in adv!
(i) Proceeds from exercise of share options by employees, the accounting entries would be
Debit Cash Credit Common stock (at par value) + Additional Paid in Capital (at the difference between the exercise price and par value). Is this correct?
(ii) I have read about this line item in US-listed companies' cash flow statement called Excess tax benefits on Stock-based compensation. It seems to me that it's sth that arise when Co record stock based comp expense (upon granting of options) at fair value derived from black scholes model. Whereas for tax accounting purposes, the stock option is only tax deductible afterwards upon actual exercise of the options (and very often this is after some time upon granting of option, and therefore the share price rose). I read that the full market value of the share price upon exercise of stock option by employee is then tax deductible. Is this correct? and also does anyone have experience modelling for stock-based compensation/tax impact of stock based compensation in DCF model?? mind sharing how to do it right?
Thanks in adv!