10,000 ordinary shares of P10 par value. The options call for a price of P25 per share and are exercisable in 3 years following the grant date. DEF exercised the options on December 31, 2020. The market price of the share was P60 on January 1, 2020, and P70 on December 31, 2020. The fair value of the share option is P35 on the date of grant.
10,000 ordinary shares of P10 par value. The options call for a price of P25 per share and are exercisable in 3 years following the grant date. DEF exercised the options on December 31, 2020. The market price of the share was P60 on January 1, 2020, and P70 on December 31, 2020. The fair value of the share option is P35 on the date of grant.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020, ABC Company granted DEF, the president, compensatory share options to buy 10,000 ordinary shares of P10 par value.
The options call for a price of P25 per share and are exercisable in 3 years following the grant date.
DEF exercised the options on December 31, 2020. The market price of the share was P60 on January 1, 2020, and P70 on December 31, 2020. The fair value of the share option is P35 on the date of grant.
By what net amount should shareholders’ equity increase as a result of the grant and exercise of the options?
a. 250,000
b. 205,000
c. 350,000
d. 600,000
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