A company established an option-based compensation plan. On the grant date, the fair value of an option was $ 15. A total of 100 select employees will receive (at the end of the three-year service period) 40 options if the company’s sales have increased by at least 10%, 60 options if sales have increased by a minimum of 15%, and 100 options if the increase in sales exceeds 20%. In the first year of the plan, the company estimated that sales would increase 12%
A company established an option-based compensation plan. On the grant date, the fair value of an option was $ 15. A total of 100 select employees will receive (at the end of the three-year service period) 40 options if the company’s sales have increased by at least 10%, 60 options if sales have increased by a minimum of 15%, and 100 options if the increase in sales exceeds 20%. In the first year of the plan, the company estimated that sales would increase 12%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
A company established an option-based compensation plan. On the grant date, the fair value of an option was $ 15. A total of 100 select employees will receive (at the end of the three-year service period) 40 options if the company’s sales have increased by at least 10%, 60 options if sales have increased by a minimum of 15%, and 100 options if the increase in sales exceeds 20%. In the first year of the plan, the company estimated that sales would increase 12% and that 3% of employees would not complete the period of service. At the end of the second year, the company changed the estimates to 16% and 5% respectively. Calculate the compensation expense for the second year.
Using the information provided, calculate the weighted average number of common shares outstanding for purposes of basic earnings per share for the years 2019 and 2020. • Common shares outstanding on January 1, 2019 = 240,000 • On July 1, 2019, 10,000 preferred shares were converted into 50,000 shares common • On November 1, 2019, the company made a fractionation of shares (stock split) from 1.60 to 1. • On February 1, 2020, 144,000 new shares were issued. • On May 1, 2020, 60,000 portfolio shares were acquired. • On July 1, 2020, another 10,000 preferred shares were converted to 50,000 common actions. • On October 1, 2020, the company distributed a dividend in shares (stock dividend) of 15%.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education