IT Solutions Ltd. has a cash - settled SARS program for employees. These employees will receive a cashpayment after five years of service, calculated as the excess of share price over $8.75. In early 20X1,employees in total are granted 180,000 units in the program. The fair value of one SARS unit is estimated at$1 at the end of 20X1, $3 at the end of 20X2, and $2 at the end of 20X3. Estimated retention is 90% at theend of 20X1, 88% at the end of 20X2, and 75% at the end of 20X3. The payment is made at the end of 20X5. Required: Provide the journal entry to be recorded with respect to the SARS program at the end of 20X1, 20X2, and 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in thefirst account field. Do not round intermediate calculations.)

The objective of the question is to determine the journal entries to be recorded for the Stock…

Answered: IT Solutions Ltd. has a cash - settled…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

IT Solutions Ltd. has a cash-settled SARS program for employees. These employees will receive a cash payment after five years of service, calculated as the excess of share price over $10.75. In early 20X1, employees in total are granted 260,000 units in the program. The fair value of one SARS unit is estimated at $1 at the end of 20X1, $3 at the end of 2ox2, and $2 at the end of 20X3. Estimated retention is 90% at the end of 20X1, 88% at the end of 20X2, and 75% at the end of 20X3. The payment is made at the end of 20X5. Required: Provide the journal entry to be recorded with respect to the SARS program at the end of 20X1, 20X2, and 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) View transaction list Journal entry worksheet 1 2 3 > Record the entry for issue of cash-settled SARS to employees. Note: Enter debits before credits. Year General Journal Debit Credit 20X1 Record…
Courtland Company issues 25,000 SARS entitling executives to receive cash at the date of exercise for the difference between the market price and $30. The fair value of an SAR on the grant date is $4. The service period is 3 years. At the end of Year 3, the Liability for SARS is $125,000. In Year 4 when the market price of the stock is $42, the SARS are exercised. Which of the following is true when the SARS are exercised?, a. The Liability for SARS is reduced by $300,000. b. The Liability for SARS is reduced by $1,050,000. c. The cash outlay for the company is $750,000. d. The company receives $300,000.
Commonly Corp. agrees to sell 100 of its products to M&H Co. for P30, 000 in August 2021. (P300 per product). Over the following six months, M&H will get the goods. The contract is updated after 60 items have been delivered, and Communion agrees to supply 80 more items for an extra P21, 600 (P270 per station) 90 more goods were supplied by commonly towards the conclusion of the year. Every sale is cash-on-delivery. Assume that the extra clause represents a potential amendment to the original contract. What annual income will be reported on the contract?
Accurate Company charges its new franchisees an initial franchise fee of P2,500,000. Of this amount, P1,000,000 is payable in cash when the agreement is signed, and the remainder is to be paid in three equal annual installments which are evidenced by 12% interest-bearing note. In consideration therefore, Accurate will assist in locating business site, conduct a market study to estimate earnings potential, supervise construction of a building, and provide initial training to employees. On December 1, 2021, Accurate entered into a franchising agreement with a franchisee. The franchise outlet was opened on January 15, 2022. Accurate had incurred a cost of P800,000 related to the franchise and it has ascertained that the collection of the note is reasonably assured.1. How much is the Franchise Revenue to be recognized in 2021? 2. How much is the Revenue to be recognized in 2022?
Accurate Company charges its new franchisees an initial franchise fee of P2,500,000. Of this amount, P1,000,000 is payable in cash when the agreement is signed, and the remainder is to be paid in three equal annual installments which are evidenced by 12% interest-bearing note. In consideration therefore, Accurate will assist in locating business site, conduct a market study to estimate earnings potential, supervise construction of a building, and provide initial training to employees. On December 1, 2021, Accurate entered into a franchising agreement with a franchisee. The franchise outlet was opened on January 15, 2022. Accurate had incurred a cost of P800,000 related to the franchise and it has ascertained that the collection of the note is reasonably assured.1. How much is the Franchise Revenue to be recognized in 2021? 2. How much is the Unearned Revenue at December 31, 2021? 3. How much is the Revenue to be recognized in 2022?
A company established an option-based compensation plan. On the grant date, the fair value of an option was $ 15. A total of 100 select employees will receive (at the end of the three-year service period) 40 options if the company’s sales have increased by at least 10%, 60 options if sales have increased by a minimum of 15%, and 100 options if the increase in sales exceeds 20%. In the first year of the plan, the company estimated that sales would increase 12% and that 3% of employees would not complete the period of service. At the end of the second year, the company changed the estimates to 16% and 5% respectively. Calculate the compensation expense for the second year. Using the information provided, calculate the weighted average number of common shares outstanding for purposes of basic earnings per share for the years 2019 and 2020. • Common shares outstanding on January 1, 2019 = 240,000 • On July 1, 2019, 10,000 preferred shares were converted into 50,000 shares common • On…
On January 1, 2023, Caramel Company enters into a contract with Keystone Inc. to perform asset management servcies for one year. Caramel Company receives a quarterly management fee of 2% of Keystone's assets under management at the end of each quarter. Caramel Company also receives a performance-based incentive fee of 10% of the fund's return in excess of the return of an observable index at the end of the year. When should Caramel Company recognize the revenue from the management fee and the performance based incentive fee?
On January, 2018 Leni Corp. grants each of its 200 employees in the production department share options. The share options will vest at the end of 2021, provided that the employees remain in the entity's employ and provided that the production increase by at least 50% by 2021. Actual production in 2018 (base year) is 120,000 units. If the production volume increase by an average of 50%-75% by 2021, each employee will receive 20 options each. If production volume inctease by 76% to 100% by 2021, each employee will receive 40 options each. If production volume increase by more than 100% by 2021, each employee will receive 50 options each. Four options plus P120 shall entitle the holder to acquire one ordinary shares (P100 par) at any time up to December 31, 2023. On the grant date, the company estimates that the share options have a fair value of P12 per option. There has been a 20% average increase in annual production for the past three years and that the company expects the same…
Brooke Remming is the Chief Executive Officer of Dundem Corp. The board of directors has agreed to pay Brooke a salary of $400,000 plus a 15% bonus if the company’s pretax income increases by at least 10% from the prior year. In the prior year, Dundem reported pretax income of $3,000,000.In the final week of the current year, Brooke projects that pretax income will be $3,250,000. While this is a nice increase over the prior year, she realizes that the increase is below the 10% required for her bonus. Brooke has devoted many years to the company and feels that the company has had another successful year thanks to her efforts and good decisions.As one example of a good decision, Brooke noticed earlier in the year that the company’s stock price had fallen to $42 per share. She felt that price was too low, so she used some of the company’s available cash to purchase 10,000 shares. The current price has risen to $50 per share, and she is considering whether to sell the stock. She calculates…
A firm enters into an 8-year contract for materials that cost $90,000 initially and $30,000/yr beginning at the end of the 4th year. The company decides to make a lump sum payment at the end of year 2 to pay off the remainder of the contract. What lump sum is necessary at 8% interest?
Frozen Delight, Inc. charges an initial franchise fee of $75,000 for the right to operate as a franchisee of Frozen Delight. Of this amount, $25,000 is collected immediately. The remainder is collected in four equal annual installments of $12,500 each. These installments have a present value of $41,402. As part of the total franchise fee, Frozen Delight also provides training (with a fair value of $2,000) to help franchisees get the store ready to open. The franchise agreement is signed on April 1, 2020, training is completed, and the store opens on July 1, 2020. Prepare the journal entries required by Frozen Delight on April 1 and July 1, 2020.
In January 2024, Continental Fund Services, Incorporated, enters into a one-year contract with a client to provide investment advisory services. The company will receive a management fee, prepaid at the beginning of the contract, that is calculated as 1.5% of the client's $310 million total assets being managed. In addition, the contract specifies that Continental will receive a performance bonus of 15% of any returns in excess of the return on the Dow Jones Industrial Average market index. Continental estimates that it will earn a $1.5 million performance bonus, but is very uncertain of that estimate, given that the bonus depends on a highly volatile stock market. On what transaction price should Continental base revenue recognition? Note: Enter your answer in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). Transaction price million

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS