Exercise 19-9 (Static) Stock options; exercise [LO19-2] SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2024. ⚫ The options permit holders to acquire 12 million of the company's $1 par common shares for $11 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 $13 per share. The fair value of the 12 million options, estimated by an appropriate option pricing model, is $3 per option. Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. & 3. Prepare the appropriate journal entries to record compensation expense on December 31, 2024, 2025, and 2026. Record the exercise of the options if all of the options are exercised on May 11, 2028, when the market price is $14 per share. Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Determine the total compensation cost pertaining to the incentive stock option plan. Note: Enter your answer in millions (i.e., 10,000,000 should be entered as 10). Total compensation cost million Reg 2 and 3 >
Exercise 19-9 (Static) Stock options; exercise [LO19-2] SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2024. ⚫ The options permit holders to acquire 12 million of the company's $1 par common shares for $11 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 $13 per share. The fair value of the 12 million options, estimated by an appropriate option pricing model, is $3 per option. Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. & 3. Prepare the appropriate journal entries to record compensation expense on December 31, 2024, 2025, and 2026. Record the exercise of the options if all of the options are exercised on May 11, 2028, when the market price is $14 per share. Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Determine the total compensation cost pertaining to the incentive stock option plan. Note: Enter your answer in millions (i.e., 10,000,000 should be entered as 10). Total compensation cost million Reg 2 and 3 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
None
![Exercise 19-9 (Static) Stock options; exercise [LO19-2]
SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based
compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2024.
⚫ The options permit holders to acquire 12 million of the company's $1 par common shares for $11 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 $13 per share.
The fair value of the 12 million options, estimated by an appropriate option pricing model, is $3 per option.
Required:
1. Determine the total compensation cost pertaining to the incentive stock option plan.
2. & 3. Prepare the appropriate journal entries to record compensation expense on December 31, 2024, 2025, and 2026. Record the
exercise of the options if all of the options are exercised on May 11, 2028, when the market price is $14 per share.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 and 3
Determine the total compensation cost pertaining to the incentive stock option plan.
Note: Enter your answer in millions (i.e., 10,000,000 should be entered as 10).
Total compensation cost
million
Reg 2 and 3 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F14c3b955-8a71-4b37-9214-3f5717f92091%2F89a75bd1-456f-4bb3-804c-095b16883726%2Flq6wwg9_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 19-9 (Static) Stock options; exercise [LO19-2]
SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based
compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2024.
⚫ The options permit holders to acquire 12 million of the company's $1 par common shares for $11 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 $13 per share.
The fair value of the 12 million options, estimated by an appropriate option pricing model, is $3 per option.
Required:
1. Determine the total compensation cost pertaining to the incentive stock option plan.
2. & 3. Prepare the appropriate journal entries to record compensation expense on December 31, 2024, 2025, and 2026. Record the
exercise of the options if all of the options are exercised on May 11, 2028, when the market price is $14 per share.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 and 3
Determine the total compensation cost pertaining to the incentive stock option plan.
Note: Enter your answer in millions (i.e., 10,000,000 should be entered as 10).
Total compensation cost
million
Reg 2 and 3 >
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
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