egy major compensation incentive for its top executives. • On January 1, 2018, 20 million options were granted, eacl the executive owning them the right to acquire six $1 par common shares. The exercise price is the market price on the grant date- share. • Options vest on January 1, 2022. They cannot be exercise before that date and will expire on December 31, 2024. • The fair value of the 20 million options, estimated by an appropriate option pricing model, is $40 per option. Ignor income tax. on March 1, 2022, when the market price of Wilson's stock v er share, 3 million of the options were exercised. he journal entry to record this would include: O A debit to paid-in capital-stock options for $120 million All of these answer choices are correct O A credit to common stock for $75 million

egy major compensation incentive for its top executives. • On January 1, 2018, 20 million options were granted, eacl the executive owning them the right to acquire six $1 par common shares. The exercise price is the market price on the grant date- share. • Options vest on January 1, 2022. They cannot be exercise before that date and will expire on December 31, 2024. • The fair value of the 20 million options, estimated by an appropriate option pricing model, is $40 per option. Ignor income tax. on March 1, 2022, when the market price of Wilson's stock v er share, 3 million of the options were exercised. he journal entry to record this would include: O A debit to paid-in capital-stock options for $120 million All of these answer choices are correct O A credit to common stock for $75 million

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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Now assume that the market price of Amazon stock on the grant date was $47 per share. Prepare the journal entries for the first year of the plan assuming that, rather than options, 710 shares of restricted stock were granted at the beginning of 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit >
Assume we are in July, 2023. In July of 2023, the share prices of company B are $80 per share. You believe they should be $30 per share, and are thus overvalued. December 2023 put options on a strike price of $60 per share are currently valued at $5. Each put contract is based on 100 shares. a.) What is your net dollar profit or loss as a holder of the put contract (based ona contract size of 100 shares) if we arrive at expiry in December and you are wrong and Company B shares are selling for $100? (Show your working in full)
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Walters Audio Visual, Inc., offers a stock option plan to its regional managers. On January 1, 2021, 40 million options were granted for 40 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, Walters 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%. 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 is $12 per share.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, 2021.6. Assuming the option…
Cheng/Hamm Incorporated developed a business strategy that uses stock options as a major compensation incentive for its top executives. On January 1, 2024, 23 million options were granted, each giving the executive owning them the right to acquire five $1 par common shares. The exercise price is the market price on the grant date – $30 per share ($150 per option). Options vest on January 1, 2028. They cannot be exercised before that date and will expire on December 31, 2030. The fair value of the 23 million options, estimated by an appropriate option pricing model, is $49 per option. Ignore income tax. Cheng/Hamm's compensation expense in 2024 for these stock options was: Note: Round your answer to nearest whole dollar amount.
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qw.128. On January 1, 2021, Adams-Meneke Corporation granted 60 million incentive stock options to division managers, each permitting holders to purchase one share of the company’s $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, currently $16 per share. The fair value of the options, estimated by an appropriate option pricing model, is $3 per option. Management’s 1.) Total Compensation Cost 2.) Record compensation expense on December 31, 2021. 3.) Record the compensation expense.
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