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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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