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You can use almost any PDF - editing software , ranging from the ... estimated until both the number of shares an individual is entitled to receive and the exercise or purchase price are nown (measurement date) Compensation cost under variable awards is ultimately based on the intrinsic value on the vesting or settlement date FASB Statement No 123 calls for different accounting and recognition of compensation cost for stock-based compensation plans, depending on whether an award quali es as a liability or an equity instrument at the grant date Inherent in the distinction between a liability and an equity instrument is an expectation as to the manner in which the award will ultimately be settled A stock-based plan expected to be settled by issuance of equity securities would be considered an equity instrument when it is granted Accordingly, compensation cost would be based on the stock price at the date of grant and would not be adjusted for subsequent changes in the stock price In contrast, a stock-based plan that requires settlement in cash, or that allows an employee to require settlement in cash, indicates that the employer has incurred a liability The amount of the liability for such an award would be measured each period based on the end-of-period stock price, similar to variable plan accounting under APB Opinion No 25 FASB Statement No 123 speci es that measurement of an equity instrument award should be based on its estimated fair value at grant date, with the resulting compensation cost recognized over the employee service period (typically the vesting period) Changes in the stock price subsequent to the grant date will have no impact on determining the value of an award at grant date The fair value of a stock option award will be estimated using an option-pricing model that considers certain variables and assumptions Restricted stock awards (called nonvested stock in FASB Statement No 123) will be measured using the market price of an unrestricted share (or vested share) of the same stock if the stock is publicly traded, or the estimated market price if it is not publicly traded In other words, shares subject to vesting provisions will not be afforded a discount in measuring compensation cost Exhibit 397 provides a comparison of compensation cost measured under FASB Statement No 123 and APB Opinion No 25 for a xed stock option and a performance stock award (c) MEASUREMENT DATE FASB Statement No 123 indicates that the measurement date for stock options or other equity instruments granted to employees as compensation should be the date at which the stock price that enters into measurement of the fair value of an award is xed Measurement of compensation cost should be based on the underlying stock price at the date the terms of a stock-based award are agreed to by the employer and the employee (in most cases, the grant date) Awards made under a plan that is subject to shareholder approval are not deemed to be granted until that approval is obtained unless approval is essentially a formality The estimated fair value at the grant date should be subsequently adjusted, if necessary, to re ect the outcome of both performance conditions and service-related factors No compensation cost will be recognized for options that do not vest due to either forfeitures upon termination of service or failure to meet speci ed performance targets or conditions Companies may base their accruals of compensation cost on the best estimate of the number of options or other equity instruments expected to vest and revise that estimate, if necessary, to re ect actual forfeitures Alternatively, for awards subject only to a service requirement, a company may begin accruing compensation cost as if all instruments were expected to vest and recognize the effect of actual forfeitures when they occur However, vested options that expire unexercised at the end of their contractual terms do not avoid recognition of compensation cost Only options forfeited 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