F- Prepare the necessary entries from 1/1/20-2/1/22 for the following events using the fair value method. If no entry is needed, write "No Entry Necessary." On 1/1/20, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 30,000 shares of common stock at $40 per share. The par value is $10 per share. On 2/1/20, options were granted to each of five executives to purchase 30,000 shares. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on 2/1/22. It is assumed that the options were for services performed equally in 2020 and 2021. The Black-Scholes option pricing model determines total compensation expense to be $3,200,000. At 2/1/22, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited.
F- Prepare the necessary entries from 1/1/20-2/1/22 for the following events using the fair value method. If no entry is needed, write "No Entry Necessary." On 1/1/20, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 30,000 shares of common stock at $40 per share. The par value is $10 per share. On 2/1/20, options were granted to each of five executives to purchase 30,000 shares. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on 2/1/22. It is assumed that the options were for services performed equally in 2020 and 2021. The Black-Scholes option pricing model determines total compensation expense to be $3,200,000. At 2/1/22, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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F- Prepare the necessary entries from 1/1/20-2/1/22 for the following events using the fair value method. If no entry is needed, write "No Entry Necessary."
- On 1/1/20, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 30,000 shares of common stock at $40 per share. The par value is $10 per share.
- On 2/1/20, options were granted to each of five executives to purchase 30,000 shares. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on 2/1/22. It is assumed that the options were for services performed equally in 2020 and 2021. The Black-Scholes option pricing model determines total compensation expense to be $3,200,000.
- At 2/1/22, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited.
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