Richardson Company is contemplating the establishment of a share-based compensation plan to provide

long-run incentives for its top management. However, members of the compensation committee of the

board of directors have voiced some concerns about adopting these plans, based on news accounts related

to a recent accounting standard in this area. They would like you to conduct some research on this recent

standard so they can be better informed about the accounting for these plans.

Instructions

If your school has a subscription to the FASB Codification, go to http://aaahq.org/ascLogin.cfm to log in and

prepare responses to the following. Provide Codification references for your responses.

(a) Identify the authoritative literature that addresses the accounting for share-based payment compensation

plans.

(b) Briefly discuss the objectives for the accounting for stock compensation. What is the role of fair value

measurement?

(c) The Richardson Company board is also considering an employee share-purchase plan, but the Board

does not want to record expense related to the plan. What criteria must be met to avoid recording

expense on an employee stock-purchase plan?