Case $15-11$ Acoounting for Employee Stock Option Plans $($ESOPs$)$

Growth Corporation offered the Ifollowing stock option plan

to its employees: Each employee will receive $1,000$ options to

purchase shcompany's common shares on the grant date, January $1,2021.$ On that date:

The market price per share was $$22$

The fair value of an option was $$3$

Required:

a$.$ Desribe how the ESOPs would have heen reported under

the provisions of APe Opinion No$.25$

b$.$ Analyze and explain the consequences of the APB Opinion

No $25$ accounting treatment. Your analysis should consider

the following:

i$)$ The conceptual framowork.

ii$)$ Any ethical implications

iii. The impact on financial statements

iv$.$ The impact on financial ratios

c$.$ The FASB now requires companies to use the fair value

method of accounting for ESOPs as described in FASB

ASC $718.$ Describe how the ESOPs will be reported under

this method.

d$.$ Analyze and explain the consequences of using fair value to

measure and report the ESOPs. Your analysis should con$-$

sider the following:

i$.$ The conceptual framework

ii Any ethical implications

iii. The impact on financial statements

iy$.$ The impact on financial ratios