A Class Exercise: Accounting for Stock Option Modifications and Option Service and Performance Conditions

Abstract

This exercise exposes students to the accounting for stock option modifications and option service and performance conditions, requiring research in the Financial Accounting Standards Board (FASB) Accounting Standards Codification and the use of the Black-Scholes option pricing model.

Students identify and apply accounting standards to account for stock option plans, stock option modifications, acquired stock option plans, and service and performance conditions that relate to stock option plans. Indirect student feedback suggests that students view the exercise as valuable. Comments include that the exercise reinforces and expands their knowledge of real-world stock compensation plans. Direct assessment data using grading rubrics finds that most students meet instructor expectations.

The exercise enhances critical thinking skills, increases professional research practice, and improves written skills. It introduces students to common real-world events and reinforces their learning related to stock compensation.

Citation

Churyk, N.T., Yu, S.(. and Rick, B. (2019), "A Class Exercise: Accounting for Stock Option Modifications and Option Service and Performance Conditions", Calderon, T.G. (Ed.) Advances in Accounting Education: Teaching and Curriculum Innovations (Advances in Accounting Education, Vol. 23), Emerald Publishing Limited, Leeds, pp. 83-98. https://doi.org/10.1108/S1085-462220190000023005