1)Cite the ASC down to the Paragraph.For example, (ASC 330-10-05-01)

2) Copy-paste the paragraph you cite from the codification into the word document

3)Interpret the codification paragraph into 'plain English' as best you can.In other words, how would you explain the appropriate accounting treatment to a colleague, boss, or business partner who has a basic understanding of accounting?You may (and are encouraged to) use debits and credits or t-accounts to illustrate the accounting if appropriate.

Question 1:

Ten years down the road, you go to work as the controller of a start-up tech company that received its second major round of funding about a year ago and is searching for its third round of funding in order to continue to grow.However, the company is struggling to adequately compensate its employees and is concerned about losing high-quality talent to larger, better-funded competitors.It has previously established a generous share-based compensation plan in which employees receive equity stakes in the firm in addition to normal salary, but given that the firm is a long way from going public many of the employees see the share-based compensation as valueless.

As such, the firm has established a new compensation plan wherein each employee receives, in addition to their normal stock grants of 20,000 shares per year,they receive an additional set of grant each year of 25,000 shares that vest on a graded basis of 25% per semi-annual period over the next two years and which, one year after full vesting, the firm promises to repurchase the grant at the greater of either $5 per share or the market price of the shares, if the equity is publicly traded at that time.

How should the firm account for the traditional equity-based compensation plan and the new compensation plan?Cite ASC where appropriate.