Under What Circumstances Should Compensation Expense Be Recorded for a Stock

question 4

Essay

Under what circumstances should compensation expense be recorded for a stock option plan?
5.Berman Corporation was organized during 20xx.In organizing,the company incurred the following costs:
1.Paid the state $900 for the corporate charter and related fees of incorporation.
2.Paid the attorney $2,500 for services rendered in connection with filing incorporation papers with the state.
3.Issued 500 shares of $5 par value common stock to an accountant in exchange for accounting services valued at $3,000.
Prepare the entries in journal form necessary to record the above transactions without explanations.

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Definitions:

Physical Flow

The tracking of physical units as they move through the production process.

Specific Identification

A method in inventory accounting that tracks the actual cost of specific items sold and in inventory.

Net Income Manipulation

The practice of altering financial statements to present a more favorable picture of a company's profits.

Average Cost Formula

A method used to calculate the cost of goods sold and ending inventory by taking the total cost of goods available for sale and dividing it by the total number of units available for sale.