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1. Estimate the total compensation costs for 10 million options: 2. Estimate the total compensation costs for fiscal years 2021 and 2022: 3. Write TobyCo's journal entries for fiscal year 2021:

1. Estimate the total compensation costs for 10 million options: 2. Estimate the total compensation costs for fiscal years 2021 and 2022: 3. Write TobyCo's journal entries for fiscal year 2021:

FINANCIAL ACCOUNTING
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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At June 30, 2021, TobyCo issued 10 million employee stock options to key employees. The vesting schedule is: 50% for a 12-month period (batch A) and 50% for a 24-month period (batch B). The fair values of stock options (per share) are estimated as follows: $2 per option for batch A and $4 per option for batch B. Fiscal year-end is December 31. 1. Estimate the total compensation costs for 10 million options: 2. Estimate the total compensation costs for fiscal years 2021 and 2022: 3. Write TobyCo's journal entries for fiscal year 2021: a) Compensation expense b) The associated deferred taxes, with tax rate = 20% 4. Assume that stock prices have been much lower than the exercise price and all options in batch A are expired in 2024. Write the following journal entries in 2024 associated with batch A options: a) Option expiration: b) Reversal of associated deferred taxes:
Transcribed Image Text:At June 30, 2021, TobyCo issued 10 million employee stock options to key employees. The vesting schedule is: 50% for a 12-month period (batch A) and 50% for a 24-month period (batch B). The fair values of stock options (per share) are estimated as follows: $2 per option for batch A and $4 per option for batch B. Fiscal year-end is December 31. 1. Estimate the total compensation costs for 10 million options: 2. Estimate the total compensation costs for fiscal years 2021 and 2022: 3. Write TobyCo's journal entries for fiscal year 2021: a) Compensation expense b) The associated deferred taxes, with tax rate = 20% 4. Assume that stock prices have been much lower than the exercise price and all options in batch A are expired in 2024. Write the following journal entries in 2024 associated with batch A options: a) Option expiration: b) Reversal of associated deferred taxes:
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