Problem 6-11 A) Briefly describe the accounting for ESOs.   B) Why

Problem 6-11 A) Briefly describe the accounting for ESOs.   B) Why is there a cost when a company grants ESOs with an exercise price equal to the current market price? C) Critics claim that ESO accounting recognizes the costs but not the benefits that arise from granting ESOs, such as improved employee motivation and employee retention. Is this true? D) Discuss how you would deal with the compensation expense arising from ESOs if you were (1) an equity analyst and (2) a credit analyst. Problem 6.6 A) For 2009, 2010, and 2011, identify Colgate's (1) tax payment/obligation if it paid the statutory tax rate, (2) tax provision made in the books, and (3) the actual tax payment/obligation. Broadly quantify how Colgate's statutory tax payment differs from its actual tax payment. Also explain why these differences occur. B) What is Colgate's effective tax rate for each of the three years? Why is it different from its statutory tax rate? Explain at least one of these differences in detail. C) What is Colgate's tax provision? Why is it different from its tax obligation/payment?   D) You are in the process of forecasting Colgate's income for the next year. What tax rate would you apply to your forecast and why?  E) Examine Colgate's deferred tax assets and liabilities. Explain why they arise in general. Provide a detailed explanation of how at least two of the deferred assets/liabilities arise and “guess” at the approximate duration over which these assets/liabilities are expected to reverse. F) Examine the “movement” in the deferred tax assets/liabilities between 2011 and 2010 and explain the major changes.

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