Quiz4_NH

xlsx

School

San Diego Mesa College *

*We aren’t endorsed by this school

Course

116B

Subject

Finance

Date

Jan 9, 2024

Type

xlsx

Pages

3

Uploaded by khoshbinsadat

Report
Student's Last Name: Halimi First name: Najeebullah Red ID: 824968242 WorldStreet, Inc., offers a stock option plan to its regional managers. On January 1, 2021,20 million options were granted for 20 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, 2023, and expire December 31, 2027. The fair value of the options, estimated by an appropriate option pricing model, is $2 per option. Because the plan does not qualify as an incentive plan, WorldStreet will receive a tax deduction upon exercise of the options equal to the excess of the market price at exercise over the exercise price. The income tax rate is 25%. Numbers only $40,000,000 million Compensation expense 20,000,000 million Paid-in capital-stock options 20,000,000 million Deferred tax asset 5000000 million Tax expense 5000000 million Compensation expense 20000000 million Paid-in capital-stock options 20000000 million Deferred tax liabilities 5000000 million Tax expense 5000000 million 4. Record the exercise of the options and their tax effect if all of the options are exercised on March 20, 2026, when the market price per share is $12 Cash 160000000 million Paid-in capital-stock options 40000000 million Common stock at par 20000000 million Paid-in capital-excess of par 180000000 million Please put your last name, first name, and Red ID, first of all. Or you may not see any. 1. Determine the total compensation cost pertaining to the stock option plan. 2. Prepare the appropriate journal entries to record compensation expense and its tax effect on December 31, 2021. 3. Prepare the appropriate journal entries to record compensation expense and its tax effect on December 31, 2022.
Compensation expense 20000000 million Paid-in capital-stock options 20000000 million 6. Prepare the option plan qualifies as an incentive plan, record the exercise of the options and their tax effect if all of the options are exercised on March 20, 2026, when the market price per share is $11 Cash 160000000 million Paid-in capital-stock options 40000000 million Common stock at par 20000000 million Paid-in capital-excess of par 180000000 million 5. Assume the option plan qualifies as an incentive plan. Prepare the appropriate journal entries to record compensation expense and its tax effect on December 31, 2021.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help