Olde Corporation provides an executive stock option plan. Under the plan, the company granted options on January 1, 2024, that permit executives to acquire 3.9 million of the company's $1 par value 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 the grant, $14 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the options, assuming the fair value approach has been selected. 2. & 4. Prepare the appropriate journal entries (if any).

Olde Corporation provides an executive stock option plan. Under the plan, the company granted options on January 1, 2024, that permit executives to acquire 3.9 million of the company's $1 par value 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 the grant, $14 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the options, assuming the fair value approach has been selected. 2. & 4. Prepare the appropriate journal entries (if any).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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