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Identifying and Analyzing Financial Statement Effects of Stock-Based Compensation The stockholders' equity of Aspen Corporation at December 31, 2019, follows. 7% Preferred stock $100 par value, 20,000 shares authorized: 4.000 shares issued and outstanding Common stock $15 par value. 300.000 shares authorized: 30.000 shares issued and outstanding $400,000 450.000 36,000 360,000 325,000 $1.571.000 Paid-in capital in excess of par value-preferred stock Paid-in capital in excess of par value-common stock Retained earnings Total stockholders equity The following transactions, among others, occurred during the following year. • Employees exercised 12,000 stock options that were granted in 2015 and had a three-year vesting period. These options had an estimated fair value of $2 at the grant date, and an exercise price of $16. There were no other vested or unvested options after this exercise. • Awarded 1,000 shares of stock to new executives, when the stock price was $36. • Sold 10,000 shares to employees under the company-wide stock purchase plan. Under the plan, employees purchased the shares at a 10% discount when the stock price was $33 per share. • Granted 40,000 new stock options, with a strike price of $34 and an estimated fair value of $6. The options vest over three years. Required Prepare the December 31, 2019, statement of stockholders' equity assuming that the company reports 2019 pretax income of $483,000 before the effects of stock-based compensation. Assume the company has a 35% tax rate.

Identifying and Analyzing Financial Statement Effects of Stock-Based Compensation The stockholders' equity of Aspen Corporation at December 31, 2019, follows. 7% Preferred stock $100 par value, 20,000 shares authorized: 4.000 shares issued and outstanding Common stock $15 par value. 300.000 shares authorized: 30.000 shares issued and outstanding $400,000 450.000 36,000 360,000 325,000 $1.571.000 Paid-in capital in excess of par value-preferred stock Paid-in capital in excess of par value-common stock Retained earnings Total stockholders equity The following transactions, among others, occurred during the following year. • Employees exercised 12,000 stock options that were granted in 2015 and had a three-year vesting period. These options had an estimated fair value of $2 at the grant date, and an exercise price of $16. There were no other vested or unvested options after this exercise. • Awarded 1,000 shares of stock to new executives, when the stock price was $36. • Sold 10,000 shares to employees under the company-wide stock purchase plan. Under the plan, employees purchased the shares at a 10% discount when the stock price was $33 per share. • Granted 40,000 new stock options, with a strike price of $34 and an estimated fair value of $6. The options vest over three years. Required Prepare the December 31, 2019, statement of stockholders' equity assuming that the company reports 2019 pretax income of $483,000 before the effects of stock-based compensation. Assume the company has a 35% tax rate.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Identifying and Analyzing Financial Statement Effects of Stock-Based Compensation The stockholders' equity of Aspen Corporation at December 31, 2019, follows. 7% Preferred stock, $100 par value, 20,000 shares authorized: 4,000 shares issued and outstanding Common stock. $15 par value. 300.000 shares authorized: 30.000 shares issued and outstanding Paid-in capital in excess of par value-preferred stock Paid-in capital in excess of par value-common stock Retained earnings Total stockholders' equity The following transactions, among others, occurred during the following year. . • Employees exercised 12,000 stock options that were granted in 2015 and had a three-year vesting period. These options had an estimated fair value of $2 at the grant date, and an exercise price of $16. There were no other vested or unvested options after this exercise. • Awarded 1,000 shares of stock to new executives, when the stock price was $36. • Sold 10,000 shares to employees under the company-wide stock purchase plan. Under the plan, employees purchased the shares at a 10% discount when the stock price was $33 per share. • Granted 40,000 new stock options, with a strike price of $34 and an estimated fair value of $6. The options vest over three years. Start of year Stock options exercised Stock award Required Prepare the December 31, 2019, statement of stockholders' equity assuming that the company reports 2019 pretax income of $483,000 before the effects of stock-based compensation. Assume the company has a 35% tax rate. Employee stock purchase Stock options granted Net income End of year Check S $ Shares Issued 4.000 0✔ 0✔ 0✓ $400,000 Preferred Stock $ 450,000 36,000 360,000 325,000 $1.571.000 ASPEN CORPORATION Statement of Stockholders' Equity par $100 400.000 S 0✔ OV 0✓ 0✔ Paid-in Capital in Excess 36.000 $ 0✔ 0✔ 0✔ 0✔ 0✓ 0✓ 4,000 $ 400.000 $ 36,000 $ Shares Issued Common Stock 30.000 S 12,000 ✓ 1,000 ✓ 10.000 ✓ 0✔ 0✓ 53,000 $ Par $15 450.000✔ S 180,000 ✓ 15,000 ✓ 150,000 ✓ 0✔ 0✔ 795,000 $ Paid-in Capital in Excess Retained Earnings 360.000 S 12,000 ✓ 21,000 ✓ 180,000 ✓ 80.000 ✓ 0✔ 653,000 $ 325,000 ✓ 0 0✔ 0✓ 0✓ 211,250 x 211,250 x
Transcribed Image Text:Identifying and Analyzing Financial Statement Effects of Stock-Based Compensation The stockholders' equity of Aspen Corporation at December 31, 2019, follows. 7% Preferred stock, $100 par value, 20,000 shares authorized: 4,000 shares issued and outstanding Common stock. $15 par value. 300.000 shares authorized: 30.000 shares issued and outstanding Paid-in capital in excess of par value-preferred stock Paid-in capital in excess of par value-common stock Retained earnings Total stockholders' equity The following transactions, among others, occurred during the following year. . • Employees exercised 12,000 stock options that were granted in 2015 and had a three-year vesting period. These options had an estimated fair value of $2 at the grant date, and an exercise price of $16. There were no other vested or unvested options after this exercise. • Awarded 1,000 shares of stock to new executives, when the stock price was $36. • Sold 10,000 shares to employees under the company-wide stock purchase plan. Under the plan, employees purchased the shares at a 10% discount when the stock price was $33 per share. • Granted 40,000 new stock options, with a strike price of $34 and an estimated fair value of $6. The options vest over three years. Start of year Stock options exercised Stock award Required Prepare the December 31, 2019, statement of stockholders' equity assuming that the company reports 2019 pretax income of $483,000 before the effects of stock-based compensation. Assume the company has a 35% tax rate. Employee stock purchase Stock options granted Net income End of year Check S $ Shares Issued 4.000 0✔ 0✔ 0✓ $400,000 Preferred Stock $ 450,000 36,000 360,000 325,000 $1.571.000 ASPEN CORPORATION Statement of Stockholders' Equity par $100 400.000 S 0✔ OV 0✓ 0✔ Paid-in Capital in Excess 36.000 $ 0✔ 0✔ 0✔ 0✔ 0✓ 0✓ 4,000 $ 400.000 $ 36,000 $ Shares Issued Common Stock 30.000 S 12,000 ✓ 1,000 ✓ 10.000 ✓ 0✔ 0✓ 53,000 $ Par $15 450.000✔ S 180,000 ✓ 15,000 ✓ 150,000 ✓ 0✔ 0✔ 795,000 $ Paid-in Capital in Excess Retained Earnings 360.000 S 12,000 ✓ 21,000 ✓ 180,000 ✓ 80.000 ✓ 0✔ 653,000 $ 325,000 ✓ 0 0✔ 0✓ 0✓ 211,250 x 211,250 x
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