der its executive stock option plan, ABC Corp. granted 30 million options on January 1, 2021, that permit executi chase 30 million of the company's $1 par common shares within the next six years, but not before December 31, 23. • The exercise price is the market price of the shares on the date of grant, $30 per share. • The fair value of the options as of grant date, estimated by an appropriate option pricing model, is $2 per opt • Assume no forfeitures. quired: Provide the journal entry for compensation expense on December 31, 2021. Provide the journal entry for compensation expense on December 31, 2022. Provide the journal entry for compensation expense on December 31, 2023. Suppose that all 30 million options are exercised on April 3, 2024, when the market price is $35 per share. Prov journal entry for exercise of the options. ho entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter all va millions (i.e., 10,000,000 should be entered as 10). Ignore taxes throughout.) nt First, calculate total compensation cost. Then, calculate compensation expense per year.) View transaction list Journal entry worksheet 2 3 4 > Provide the journal entry for compensation expense on December 31, 2021. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2021 Record entry Clear entry View general journal
der its executive stock option plan, ABC Corp. granted 30 million options on January 1, 2021, that permit executi chase 30 million of the company's $1 par common shares within the next six years, but not before December 31, 23. • The exercise price is the market price of the shares on the date of grant, $30 per share. • The fair value of the options as of grant date, estimated by an appropriate option pricing model, is $2 per opt • Assume no forfeitures. quired: Provide the journal entry for compensation expense on December 31, 2021. Provide the journal entry for compensation expense on December 31, 2022. Provide the journal entry for compensation expense on December 31, 2023. Suppose that all 30 million options are exercised on April 3, 2024, when the market price is $35 per share. Prov journal entry for exercise of the options. ho entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter all va millions (i.e., 10,000,000 should be entered as 10). Ignore taxes throughout.) nt First, calculate total compensation cost. Then, calculate compensation expense per year.) View transaction list Journal entry worksheet 2 3 4 > Provide the journal entry for compensation expense on December 31, 2021. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2021 Record entry Clear entry View general journal
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Under its executive stock option plan, ABC Corp. granted 30 million options on January 1, 2021, that permit executives to
purchase 30 million of the company's $1 par common shares within the next six years, but not before December 31,
2023.
• The exercise price is the market price of the shares on the date of grant, $30 per share.
• The fair value of the options as of grant date, estimated by an appropriate option pricing model, is $2 per option.
• Assume no forfeitures.
Required:
1. Provide the journal entry for compensation expense on December 31, 2021.
2. Provide the journal entry for compensation expense on December 31, 2022.
3. Provide the journal entry for compensation expense on December 31, 2023.
4. Suppose that all 30 million options are exercised on April 3, 2024, when the market price is $35 per share. Provide
the journal entry for exercise of the options.
(If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter all values
in millions (i.e., 10,000,000 should be entered as 10). Ignore taxes throughout.)
[Hint First, calculate total compensation cost. Then, caiculate compensation expense per year.]
View transaction list
Journal entry worksheet
1
3
4
>
Provide the journal entry for compensation expense on December 31, 2021.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
December 31, 2021
Record entry
Clear entry
View general journal](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F264ec024-91a9-4da1-aedc-4284cec9541b%2F261c66f5-687c-4de2-8755-e72846abc0d1%2Flr05xac_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Under its executive stock option plan, ABC Corp. granted 30 million options on January 1, 2021, that permit executives to
purchase 30 million of the company's $1 par common shares within the next six years, but not before December 31,
2023.
• The exercise price is the market price of the shares on the date of grant, $30 per share.
• The fair value of the options as of grant date, estimated by an appropriate option pricing model, is $2 per option.
• Assume no forfeitures.
Required:
1. Provide the journal entry for compensation expense on December 31, 2021.
2. Provide the journal entry for compensation expense on December 31, 2022.
3. Provide the journal entry for compensation expense on December 31, 2023.
4. Suppose that all 30 million options are exercised on April 3, 2024, when the market price is $35 per share. Provide
the journal entry for exercise of the options.
(If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter all values
in millions (i.e., 10,000,000 should be entered as 10). Ignore taxes throughout.)
[Hint First, calculate total compensation cost. Then, caiculate compensation expense per year.]
View transaction list
Journal entry worksheet
1
3
4
>
Provide the journal entry for compensation expense on December 31, 2021.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
December 31, 2021
Record entry
Clear entry
View general journal
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