Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Northrop charge to compensation expense for the year ended December 31, 2021?
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On the first day of 2021, Northrop granted stock options to key employees for the purchase of 86,000 shares of the company's common stock at $27 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2023, by the grantees still in the employ of the company. No options were terminated during 2021, but the company does have an experience of 6% forfeitures over the life of the stock options. The market price of the common stock was $33 per share at the date of the grant. Northrop used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Northrop charge to compensation expense for the year ended December 31, 2021?
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$430,000.
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$404,200.
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$808,400.
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- On January 2, 2019, Brust Corporation grants its new CFO 2,000 restricted share units. Each of the time-vested restricted share units entitles the CFO to receive one share of Brust common stock if she remains an employee of the company for 4 years. On January 2, 2019, shares of Brusts 1 par value common are trading at 29.50 per share. The company estimates that the CFO will complete all 4 years of required service with the company. Prepare the journal that Brust should make each year to account for the restricted share units.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.On January 1, 2024, Jingrong Corporation granted stock options to key employees for the purchase of 81,000 shares of the company's common stock at $28 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2026, by the grantees still in the employ of the company. No options were terminated during 2024, but the company does have an experience of 6% forfeitures over the life of the stock options. The market price of the common stock was $34 per share at the date of the grant. Jingrong Corporation used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Jingrong charge to compensation expense for the year ended December 31, 2024? Multiple Choice $405,000 $810,000 $380,700 $761,400
- On January 1, 2024, Jingrong Corporation granted stock options to key employees for the purchase of 81,000 shares of the company's common stock at $28 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2026, by the grantees still in the employ of the company. No options were terminated during 2024, but the company does have an experience of 6% forfeitures over the life of the stock options. The market price of the common stock was $34 per share at the date of the grant. Jingrong Corporation used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Jingrong charge to compensation expense for the year ended December 31, 2024?On November 1, 2019, Sheridan Corp. adopted a stock option plan that granted options to key executives to purchase 42,300 common shares. The options were granted on January 2, 2020, and were exercisable two years after the date of grant if the grantee was still a company employee; the options expire six years from the date of grant. The option price was set at $39, and total compensation expense was estimated to be $541,000. Note that the calculation did not take forfeitures into account. On April 1, 2021, 3,300 options were terminated when some employees resigned from the company. The fair value of the shares at that date was $26. All of the remaining options were exercised during the year 2022: 29,600 on January 3 when the fair value was $49, and 9,400 on May 1 when the fair value was $55 a share. Assume that the entity follows ASPE and has chosen not to reflect forfeitures in its upfront estimate of compensation expense. (a) Prepare journal entries relating to the stock option plan…On January 1, 2018, Hugh Morris Comedy Club (HMCC) granted 1 million stock options to key executivesexercisable for 1 million shares of the company’s common stock at $20 per share. The stock options are intendedas compensation for the next three years. The options are exercisable within a four-year period beginningJanuary 1, 2021, by the executives still in the employ of the company. No options were terminated during 2018.The market price of the common stock was $25 per share at the date of the grant. HMCC estimated the fair valueof the options at $9 each. 1% of the options are forfeited during 2019 due to executive turnover. What amountshould HMCC record as compensation expense for the year ended December 31, 2019, assuming HMCCchooses the option to record forfeitures as they actually occur?
- On January 1, 2021, Hugh Morris Comedy Club (HMCC) granted 1 million stock options to key executives exercisable for 1 million shares of the company’s common stock at $20 per share. The stock options are intended as compensation for the next three years. The options are exercisable within a four-year period beginning January 1, 2024, by the executives still in the employ of the company. No options were terminated during 2021. The market price of the common stock was $25 per share at the date of the grant. HMCC estimated the fair value of the options at $9 each. One percent of the options are forfeited during 2022 due to executive turnover. What amount should HMCC record as compensation expense for the year ended December 31, 2022, assuming HMCC chooses the option to record forfeitures as they actually occur?On January 1, 2022, Ron Corp. granted stock options to key employees for the purchase of 80,000 shares of the company's common stock at $25 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2024, by the grantees still in the employ of the company. No options were terminated during 2022, but the company does have an experience of 4% forfeitures over the life of the stock options. The market price of the common stock was $31 per share at the date of the grant. G Corp. used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Ron charge to compensation expense for the year ended December 31, 2022? A. $307,200. B. $320,000. C. $384,000. D. $400,000.On January 1, 2016, Pall Corp. granted stock options to key employees for the purchase of 40,000 shares of the company’s common stock at $25 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2018, by the grantees still in the employ of the company. No options were terminated during 2016, but the company does have an experience of 4% forfeitures over the life of the stock options. The market price of the common stock was $32 per share at the date of the grant. Pall Corp. used the binomial pricing model and estimated the fair value of each of the options at $10. What amount should Pall charge to compensation expense for the year ended December 31, 2016? a. $153,600 b. $160,000 c. $192,000 d. $200,000
- On January 1, 2021, Hugh Morris Comedy Club (HMCC) granted 1.2 million stock options to key executives exercisable for 1.2 million shares of the company’s common stock at $20 per share. The stock options are intended as compensation for the next three years. The options are exercisable within a four-year period beginning January 1, 2024, by the executives still in the employ of the company. No options were terminated during 2021. The market price of the common stock was $23 per share at the date of the grant. HMCC estimated the fair value of the options at $12 each. 1% of the options are forfeited during 2022 due to executive turnover. What amount should HMCC record as compensation expense for the year ended December 31, 2022, assuming HMCC chooses the option to record forfeitures as they actually occur? (Enter your answer in whole dollars.)On January 1, 2024, Wendy Day Company granted stock options to key executives exercisable for 500,000 shares of the company's common stock at $18 per share. The stock options are intended as compensation for the next four years. The options are exercisable within a four-year period beginning January 1, 2028, by the executives still in the employ of the company. No options were terminated during 2024, but the company anticipates 5% forfeitures over the life of the stock options. The market price of the common stock was $18 per share at the date of the grant. Wendy Day estimated the fair value of the options at $4 each. 1% of the options are forfeited during 2025 due to executive turnover. What amount should Wendy Day record as compensation expense for the year ended December 31, 2025, assuming the company chooses to estimate forfeitures? Multiple Choice $475,000 $495,000 $500,000 $520,000On January 1, 2021, Sweet Inc. granted stock options to officers and key employees for the purchase of 22,000 shares of the company's $10 par common stock at $25 per share. The options were exercisable within a 5-year period beginning January 1, 2023, by grantees still in the employ of the company, and expiring December 31, 2027. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be $366,800. On April 1, 2022, 2.200 options were terminated when the employees resigned from the company. The market price of the common stock was $34 per share on this date. On March 31, 2023, 13,200 options were exercised when the market price of the common stock was $41 per share. Prepare journal entries to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2021, 2022, and 2023. (Credit account titles…
