fx services granted 15 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. the common shares have a market price of $8 per share on the grant date. ignoring taxes, what is the effect on earnings in the year after the shares are granted to executives?

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08-11-2022
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fx services granted 15 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. the common shares have a market price of $8 per share on the grant date. ignoring taxes, what is the effect on earnings in the year after the shares are granted to executives?

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Bhuvangarg Bhuvangarg · Answer 1 · 2022-11-12T17:38:28+01:00

The term "share" refers to the portion of the company owned by the individual who purchased the share.It's a way to get money for the business when it needs it.

The total cost of restricted share compensation is equal to the fair value of each share divided by the number of shares given to executives, which is equal to $15 million, or $8 per share.

The total cost of $120 million in compensation will be deducted equally over the three vesting years. This will have a negative impact on earnings, resulting in a 40 million dollar annual loss ($120 million divided by three years).

What are shares, exactly?

A corporation's equity ownership is represented by shares. Shares are a form of financial asset for some businesses that guarantee an equal distribution of any declared residual profits in the form of dividends. Investors of a stock that delivers no profits don't partake in that frame of mind of benefits.

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