FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Martinez Audio Visual Incorporated offers an incentive stock option plan to its regional managers. On January 1, 2024, options were
granted for 40 million $1 par common shares.
• The exercise price is the market price on the grant date-$8 per share.
.
Options cannot be exercised prior to January 1, 2026, and expire December 31, 2030.
. The fair value of the 40 million options, estimated by an appropriate option pricing model, is $1 per option
Required:
1. Determine the total compensation cost pertaining to the incentive stock option plan.
2. to 5. Prepare the appropriate journal entries to record compensation expense on December 31, 2024 and 2025. Prepare the
appropriate journal entry to record the exercise of 75% of the options on March 12, 2026, when the market price is $9 per share and
the entry on December 31, 2030, when the remaining options that have vested expire without being exercised
Complete this question by entering your answers in the tabs below.
Req 1
Reg 2 to 5
Prepare the appropriate journal entries to record compensation expense on December 31, 2024 and 2025, Prepare the appropriate
journal entry to record the exercise of 75% of the options on March 12, 2026, when the market price is $9 per share and the entry on
December 31, 2030, when the remaining options that have vested expire without being exercised.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in
millions (i... 10,000,000 should be entered as 10).
View transaction list
Journal entry worksheet
1
2
3
4
Record compensation expense on December 31, 2024.
Show less A
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Transcribed Image Text:Martinez Audio Visual Incorporated offers an incentive stock option plan to its regional managers. On January 1, 2024, options were granted for 40 million $1 par common shares. • The exercise price is the market price on the grant date-$8 per share. . Options cannot be exercised prior to January 1, 2026, and expire December 31, 2030. . The fair value of the 40 million options, estimated by an appropriate option pricing model, is $1 per option Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. to 5. Prepare the appropriate journal entries to record compensation expense on December 31, 2024 and 2025. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2026, when the market price is $9 per share and the entry on December 31, 2030, when the remaining options that have vested expire without being exercised Complete this question by entering your answers in the tabs below. Req 1 Reg 2 to 5 Prepare the appropriate journal entries to record compensation expense on December 31, 2024 and 2025, Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2026, when the market price is $9 per share and the entry on December 31, 2030, when the remaining options that have vested expire without being exercised. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i... 10,000,000 should be entered as 10). View transaction list Journal entry worksheet 1 2 3 4 Record compensation expense on December 31, 2024. Show less A
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