Response to the following questions:
1. Under the fair value method, how does a corporation determine the total compensation cost for a compensatory share option plan? How does it recognize this amount as compensation expense?
2. What are share appreciation rights? Why are they advantageous to an employee?
3. Define the following terms regarding preferred stock: (a) dividend preference, (b) cumulative, (c) participating, (d) convertible, (e) warrants, (f) callable, and (g) redeemable.
If possible, please give examples to better understand your response.