A supervisory employee is a recipient of a stock option which vested during the year. The following data pertains to the exercise of the option and its subsequent sale by the employee: Value of stocks at vesting date P45,000 Exercise price of option 30,000 Selling price of stocks 50,000 How much shall be the supplemental compensation of the employee which will be added to his regular compensation and will be subject to the regular income tax?

A supervisory employee is a recipient of a stock option which vested during the year. The following data pertains to the exercise of the option and its subsequent sale by the employee: Value of stocks at vesting date P45,000 Exercise price of option 30,000 Selling price of stocks 50,000 How much shall be the supplemental compensation of the employee which will be added to his regular compensation and will be subject to the regular income tax?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The following data are for the pension plan for the employees of Carla Vista Company. Accumulated benefit obligation Projected benefit obligation Plan assets (at fair value) AOCL - net loss Settlement rate (for year) Expected rate of return (for year) 1/1/20 $5700000 $107000. $35300. $41300. $102300. 6100000 5300000 0 12/31/20 $ 5900000 6300000 6700000 1023000 11% 9% 12/31/21 $ 7500000 8100000 7300000 1070000 10% Carla Vista's contribution was $910000 in 2021 and benefits paid were $820000. Carla Vista estimates that the average remaining service life is 10 years. The corridor for 2021 was $670000. The amount of AOCI-net loss amortized in 2021 was 7%
On January 1, 2021, a company granted stock options for 89,000 shares of its $12 par value common stock to its key employees. Each option entitles the employees to purchase one share of common stock at $22. The Black-Scholes option pricing model determines total compensation expense to be $220,000. The options are exercisable beginning January 1, 2024. On January 1, 2024, when the market price of the stock was $35 per share, 5,000 options were exercised. To record the 5,000 options exercised, the company should record Cash in the amount of $__________. (if no cash amount should be recorded, then enter 0).
Required information [The following information applies to the questions displayed below.] On January 1, year 1, Tyra started working for Hatch Corporation. New employees must choose immediately between receiving 7 NQOs (each NQO provides the right to purchase for $5 per share 10 shares of Hatch stock) or 50 restricted shares. Hatch's stock price is $5 on Tyra's start date. Either form of equity-based compensation will vest in two years. Tyra believes that the stock will be worth $15 per share in two years and $25 in four years when she will sell the stock. Tyra's marginal tax rate is 32 percent and her long-term capital gains rate is 15 percent. Assuming that Tyra's price predictions are correct, answer the following questions (ignore present value, and use nominal dollars): (List cash outflows as negative amounts. Leave no answers blank. Enter zero if applicable.) c. What are the cash-flow effects to Tyra in the year she receives the restricted stock, in the year the stock vests, and…
Cullumber Company sponsors a defined benefit pension plan. The corporation's actuary provides the following information about the plan. Vested benefit obligation Accumulated benefit obligation Projected benefit obligation Plan assets (fair value) Settlement rate and expected rate of return Pension asset/liability Service cost for the year 2020 Contributions (funding in 2020) Benefits paid in 202- Actual return on the plan assets $ Net pension liability gains and losses $ (a) Compute the actual return on the plan assets in 2020. Net gain or loss amortization January 1, 2020 $1,640 (d) Compute pension expense for 2020. Pension expense 2,060 $ $ 2,390 1,770 620 230 December 31, 2020 $2,060 2,610 3,230 2,490 (b) Compute the amount of the other comprehensive income (G/L) as of December 31, 2020. (Assume the January 1, 2020, balance was zero.) (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 10 % ? (c) Compute the amount of net gain or loss…
Brack Corporation grants a nonqualified stock option to , an employee, on January 1, , that entitled to acquire shares of stock at per share. On this date, the stock has a FMV and the option has a readily ascertainable FMV of per share. exercises the option on January 1, (when the FMV of the stock is ), and acquires shares of the stock for per share. later sells the stock on January 1, , for per share. a. What are the tax consequences to and Corporation on the following dates: January 1, ; January 1, ; and January 1, ? b. How would your answer to Part a change if the stock were instead closely-held and the option had no readily ascertainable FMV?
You [The following information applies to the questions displayed below.] The following summary data for the payroll period ended December 27, 2021, are available for Cayman Coating Company: Gross pay $ 100,000 FICA tax withholdings ?question mark Income tax withholdings 15,150 Group hospitalization insurance 1,580 Employee contributions to pension plan ?question mark Total deductions 26,673 Net pay ?question mark Additional information: For employees, FICA tax rates for 2021 were 7.65% on the first $142,800 of each employee’s annual earnings. However, no employees had accumulated earnings for the year in excess of the $142,800 limit. For employers, FICA tax rates for 2021 were also 7.65% on the first $142,800 of each employee’s annual earnings. The federal and state unemployment compensation tax rates are 0.6% and 5.4%, respectively. These rates are levied against the employer for the first $7,000 of each employee’s annual earnings. Only $15,700 of the gross…
Pastore Incorporated granted options for 1 million shares of its $1 par common stock at the beginning of the current year. The exercise price is $31 per share, which was also the market value of the stock on the grant date. The fair value of the options was estimated at $9.00 per option. What would be the total compensation indicated by these options?
Concord Company establishes a stock-appreciation rights program that entitles its new president Ben Davis to receive cash for the difference between the market price of the stock and a pre-established price of $33 (also market price) on December 31, 2021, on 37,700 SARs. The date of grant is December 31, 2021, and the required employment (service) period is 4 years. President Davis exercises all of the SARS in 2027. The fair value of the SARS is estimated to be $6 per SAR on December 31, 2022; $10 on December 31, 2023; $14 on December 31, 2024; $6 on December 31, 2025; and $17 on December 31, 2026. (a) Prepare a 5-year (2022-2026) schedule of compensation expense pertaining to the 37,700 SARS granted president Davis. (If the compensation decreases from prior year enter the amount as a negative number in the table eg -25,000 or (25,000)) Cumulative Compensation Recognizable Date 12/31/22 $ 12/31/23 12/31/24 12/31/25 Fair Value Percentage Accrued % $ Compens
Prepare any necessary journal entries for Red Robin's stock-based compensation plan for 2022. Red Robin granted 67,200 employee stock options on January 1, 2021. The options give the employees the right to acquire 67,200 shares of Red Robin's common stock for an exercise price of $21.65 per share. The market price on the date of grant was $21.65. The required vesting period is 2 years, so the options vest on December 31 of the current year (2022). The options have a 7-year expiration period. Additional information is below: Fair Value Actual Forfeitures Estimated Forfeiture Rate 12/31/2021 $5.65 Total compensation expense at fair value Percentage of Options Expected to vest Expected total compensation expense Cumulative rate of amortization Cumulative compensation expense Expense recognized in prior years Current year compensation expense 5% 12/31/2022 $6.25 850 4% 12/31/2021 389,760 95% 370,272 50% 185,136 185,136 12/31/2022 389,760 96% 374,170 100% 374,170 185,136 189,034
The following summary data for the payroll period ended December 27, 2021, are available for Cayman Coating Company: Gross pay FICA tax withholdings Income tax withholdings Group hospitalization insurance Employee contributions to pension plan Total deductions Net pay $ 93,000 ? 15,480 1,650 ? 25,455 ? Additional information: • For employees, FICA tax rates for 2021 were 7.65% on the first $142,800 of each employee's annual earnings. However, no employees had accumulated earnings for the year in excess of the $142,800 limit. • For employers, FICA tax rates for 2021 were also 7.65% on the first $142,800 of each employee's annual earnings. • The federal and state unemployment compensation tax rates are 0.6% and 5.4%, respectively. These rates are levied against the employer for the first $7,000 of each employee's annual earnings. Only $15,600 of the gross pay amount for the December 27, 2021, pay period was owed to employees who were still under the annual limit. b-2. Assuming that…
) Drie Company granted 126,000 stock options to employees on 12/31/2021 as compensation over the next 3 years. The options had a strike price of $41 per share and market prices of $49 on 12/31/2022 and $47 on 12/31/2023. If they originally estimated the original fair value to be $1,260,000, how much compensation expense should they recognize on 12/31/2023, assuming that the options can only be used to purchase stock? ( ¹) O $1,008,000 O $756,000 O $252,000 O $420,000
JBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, JBL granted options to key officers on January 1, 2024 . The options permit holders to acquire 6 million of the company's $1 par common shares for $30 within the next six years, but not before January 1, 2027 (the vesting date). The market price of the shares on the date of grant is $34 per share. The fair value of the 6 million options, estimated by an appropriate option pricing model, is $7 per option. Because the plan does not qualify as an Incentive plan, JBL 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 tax rate is 25%. Required: 1. Determine the total compensation cost pertaining to the Incentive stock option plan. 2. Prepare the appropriate journal entries to record compensation expense and its tax effect on…