egy major compensation incentive for its top executives. • On January 1, 2018, 20 million options were granted, eacl the executive owning them the right to acquire six $1 par common shares. The exercise price is the market price on the grant date- share. • Options vest on January 1, 2022. They cannot be exercise before that date and will expire on December 31, 2024. • The fair value of the 20 million options, estimated by an appropriate option pricing model, is $40 per option. Ignor income tax. on March 1, 2022, when the market price of Wilson's stock v er share, 3 million of the options were exercised. he journal entry to record this would include: O A debit to paid-in capital-stock options for $120 million All of these answer choices are correct O A credit to common stock for $75 million

egy major compensation incentive for its top executives. • On January 1, 2018, 20 million options were granted, eacl the executive owning them the right to acquire six $1 par common shares. The exercise price is the market price on the grant date- share. • Options vest on January 1, 2022. They cannot be exercise before that date and will expire on December 31, 2024. • The fair value of the 20 million options, estimated by an appropriate option pricing model, is $40 per option. Ignor income tax. on March 1, 2022, when the market price of Wilson's stock v er share, 3 million of the options were exercised. he journal entry to record this would include: O A debit to paid-in capital-stock options for $120 million All of these answer choices are correct O A credit to common stock for $75 million

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 23E

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On January 1, 2019, Phoenix Corporation adopts a performance-based share option plan for 25 executives, with the number of shares based on the yearly increase in sales. At the end of 2019, based on a 10% increase in sales, it expects that each executive will be granted 150 options and that the fair value of an option expected to vest is 15.75. Phoenix expects a turnover rate of 15% over the 3-year service period. Determine the compensation expense for 2019 for this plan.
Cheng/Hamm Incorporated developed a business strategy that uses stock options as a major compensation incentive for its top executives. On January 1, 2024, 23 million options were granted, each giving the executive owning them the right to acquire five $1 par common shares. The exercise price is the market price on the grant date – $30 per share ($150 per option). Options vest on January 1, 2028. They cannot be exercised before that date and will expire on December 31, 2030. The fair value of the 23 million options, estimated by an appropriate option pricing model, is $49 per option. Ignore income tax. Cheng/Hamm's compensation expense in 2024 for these stock options was: Note: Round your answer to nearest whole dollar amount.
Wilson Inc. developed a business strategy that uses stock options as a major compensation incentive for its top executives. On January 1, 2021, 20 million options were granted, each giving the executive owning them the right to acquire five $1 par common shares. The exercise price is the market price on the grant date—$10 per share. Options vest on January 1, 2025. They cannot be exercised before that date and will expire on December 31, 2027. The fair value of the 20 million options, estimated by an appropriate option pricing model, is $40 per option. Ignore income tax.Wilson's compensation expense in 2021 for these stock options was: $800 million. $200 million. $400 million. $0.
In order to retain certain key executives, Wildhorse Corporation granted them incentive stock options on December 31, 2024. A total of 152000 options were granted at an option price of $35 per share. Market prices of the stock were as follows: December 31, 2025 December 31, 2026 The options were granted as compensation for executives' services to be rendered over a two-year period beginning January 1, 2025. The Black-Scholes option-pricing model determined total compensation expense to be $1501000. $44 per share 49 per share What amount of compensation expense should Wildhorse recognize as a result of this plan for the year ended December 31, 2025 under the fair value method? O $750500 $1653000 $1501000 $2622950
The Josh Cutler Corporation provides restricted stock to certain executives. Under the plan, the company granted 30 million shares on January 1, 2024, which vest in four years. The fair value of the shares is $15.00. No forfeitures are anticipated. Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the restricted stock. 2. & 3. Prepare the appropriate journal entries (if any).
Union Pacific Corp uses stock options as a major compensation incentive for its top executives. On January 1, 2021, 23 million options were granted, each giving the executive owning them the right to acquire five $1 par common shares. The exercise price is the market price on the grant date – $30 per share ($120 per option). Options vest on January 1, 2025. They cannot be exercised before that date and will expire on December 31, 2027. The fair value of the 23 million options, estimated by an appropriate option pricing model, is $43 per option. Ignore income tax. Union Pacific Corp's compensation expense in 2021 for these stock options was: (Round your answer to nearest whole dollar amount.) Multiple Choice $247 million. $989 million. $494 million. $0.
Heidi Software Corporation provides a variety of share-based compensation plans to its employees. Under its executive stock option plan, the company granted options on January 1, 2024, that permit executives to acquire 18 million of the company's $1 par common shares within the next five years, but not before December 31, 2025 (the vesting date). • The exercise price is the market price of the shares on the date of grant, $31.00 per share. The fair value of the 18 million options, estimated by an appropriate option pricing model, is $7 per option. • No forfeitures are anticipated. • Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the options. 2. Prepare the appropriate journal entry to record the award of options on January 1, 2024. 3. Prepare the appropriate journal entry to record compensation expense on December 31, 2024. 4. Prepare the appropriate journal entry to record compensation expense on December 31, 2025. Complete this question by entering…
Heidi Software Corporation provides a variety of share-based compensation plans to its employees. Under its executive stock option plan, the company granted options on January 1, 2024, that permit executives to acquire 4 million of the company’s $1 par common shares within the next five years, but not before December 31, 2025 (the vesting date). The exercise price is the market price of the shares on the date of grant, $14 per share. The fair value of the 4 million options, estimated by an appropriate option pricing model, is $3 per option. No forfeitures are anticipated. Ignore taxes. Required: Determine the total compensation cost pertaining to the options. Prepare the appropriate journal entry to record the award of options on January 1, 2024. Prepare the appropriate journal entry to record compensation expense on December 31, 2024. Prepare the appropriate journal entry to record compensation expense on December 31, 2025.
On January 1, 2024, Sherwood Company granted 97,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2026, and expire on January 1, 2030. Each option can be exercised to acquire one share of $1 par common stock for $8. An option-pricing model estimates the fair value of the options to be $3 on the date of grant. If unexpected turnover in 2025 caused the company to estimate that 15% of the options would be forfeited, what amount should Sherwood recognize as compensation expense for 2025?
On January 1, 2024, Donnelly Company granted 97,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2026, and expire on January 1, 2030. Each option can be exercised to acquire one share of $1 par common stock for $9. An option-pricing model estimates the fair value of the options to be $3 on the date of grant. What amount should Donnelly recognize as compensation expense for 2024? Note: Round your answer to the nearest dollar amount.
On November 1, 2025, Columbo Company adopted a stock-option plan that granted options to key executives to purchase 30,000 shares of the company's $10 par value common stock. The options were granted on January 2, 2026, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $450,000. All of the options were exercised during the year 2029: 20,000 on January 3 when the market price was $67, and 10,000 on May 1 when the market price was $77 a share. Prepare journal entries relating to the stock option plan for the years 2026, 2027, and 2028. Assume that the employee performs services equally in 2026 and 2027. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is…
On January 1st, 2021, Moon Corp. granted stock options to its senior executive officers. This is the only stock option plan that Moon offers and the details are as follows: Option to purchase: 10,000 common shares Option price per share: $33.00 Fair value per common share on date of grant: $25.40 Stock option expiration: December 31, 2028 Date when options are first exercisable: January 1, 2025 Total estimated compensation expense related to the options: $84,000 On January 1, 2023, 2,000 options were cancelled when one of the senior officers left the company. On January 1, 2026, 7,000 of the options were exercised when the fair value of the common shares was $36. The remaining stock options were allowed to expire. Assume that the entity follows ASPE and has decided not to include an estimate of forfeitures upon initial recognition of the compensation expense. Required: 1. Record all journal entries required for 2021. 2. Record all journal entries required for 2023. 3. Record the…