In March 2004, the FASB issued an exposure draft of a standard proposing the expensing of ESOs. However, the proposal faced powerful opponents. These included large corporations such as Texas instruments, Cisco Systems Inc., Intel Corporation, and SUn Microsystems, Inc., all of which were heavy ESO users. Als, bills were introduced in the U. S. Congress to override or water down the expensing requirement. For example, one such bill would have limited ESO expensing to the firm's top five officers. These bills were of concern, since Congress has the power to override the FASB. Objections to the proposed standard were similar to those raised when the FASB attempted to implement a similar standard in 1994. These include the confusing of investors, damage to job creation and innovation, damage to the competitive position of U. S. industry, and unreliability of fair value ESO measures. The proposed standard also had powerful proponents, including some congressional leaders and then- Chairman Greenspan of the Federal Reserve. Also, despite the opposing arguments, by early 2004 almost 500 U. S. corporations had voluntarily decided to expense their ESOs. Required:
a. In theory, what are the advantages of ESOs as a compensation device?
b. In practice, during the period leading up to the 2007– 2008 market meltdowns, what were the claimed negative effects of ESOs on financial institution managers’ incentives and actions?
c. Are ESOs an expense? Explain why or why not.

The starr theater, owned by meg vargo, will begin operations in march. the starr will be unique in that it will show only triple features of sequential theme movies. as of march 1, the ledger of starr showed: cash $3,150, land $22,000, buildings (concession stand, projection room, ticket booth, and screen) $10,000, equipment $10,000, accounts payable $7,300, and owner’s capital $37,850. during the month of march, the following events and transactions occurred.mar. 2 rented the three indiana jones movies to be shown for the first 3 weeks of march. the film rental was $3,600; $1,600 was paid in cash and $2,000 will be paid on march 10.3 ordered the lord of the rings movies to be shown the last 10 days of march. it will cost $200 per night.9 received $4,500 cash from admissions.10 paid balance due on indiana jones movies rental and $2,200 on march 1 accounts payable.11 starr theater contracted with adam ladd to operate the concession stand. ladd is to pay 15% of gross concession receipts, payable monthly, for the rental of the concession stand.12 paid advertising expenses $900.20 received $5,100 cash from customers for admissions.20 received the lord of the rings movies and paid the rental fee of $2,000.31 paid salaries of $2,900.31 received statement from adam ladd showing gross receipts from concessions of $6,000 and the balance due to starr theater of $900 ($6,000 × 15%) for march. ladd paid one-half the balance due and will remit the remainder on april 5.31 received $9,200 cash from customers for admissions.1.) enter the beginning balances in the ledger.2.) journalize the march transactions. starr records admission revenue as service revenue, rental of the concession stand as rent revenue, and film rental expense as rent expense. (credit account titles are automatically indented when the amount is entered. do not indent manually. record journal entries in the order presented in the problem. if no entry is required, select "no entry" for the account titles and enter 0 for the amounts.)3.) post the march journal entries to the ledger. (post entries in the order of journal entries presented in the previous question.)