Kick the Bucket Co. issued 30,000 at-the-money stock options to its management on January 1, 2025. These options vest on January 1, 2028. Kick The Budget's share price was $12 on the grant date and $18 on the vesting date. Estimates of the fair value of these options showed that they were worth $2 on the grant date a $7 on the vesting date. On the vesting date, management exercised all 30,000 options. Kick the Budget has a

Kick the Bucket Co. issued 30,000 at-the-money stock options to its management on January 1, 2025. These options vest on January 1, 2028. Kick The Budget's share price was $12 on the grant date and $18 on the vesting date. Estimates of the fair value of these options showed that they were worth $2 on the grant date a $7 on the vesting date. On the vesting date, management exercised all 30,000 options. Kick the Budget has a

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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On October 15, 2023, the board of directors of Martinez Materials Corporation approved a stock option plan for key executives. On January 1, 2024, 22 million stock options were granted, exercisable for 22 million shares of Martinez's $1 par common stock. • The options are exercisable between January 1, 2027, and December 31, 2029, at 80% of the quoted market price on January 1, 2024, which was $15. • The fair value of the 22 million options, estimated by an appropriate option pricing model, is $6 per option. • Martinez chooses the option to recognize forfeitures only when they occur. • Ten percent (2.2 million) of the options were forfeited when an executive resigned in 2025. • All other options were exercised on July 12, 2028, when the stock's price jumped unexpectedly to $21 per share. Required: 1. When is Martinez's stock option measurement date? 2. Determine the compensation expense for the stock option plan in 2024. (Ignore taxes.) 3. Prepare the journal entries to reflect the…
On January 1, 2021, Howmet Aerospace granted options that permit executives to purchase 34 million of the company's $1 par common shares within the next eight 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, $19 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. No forfeitures are anticipated. The options are exercised on April 2, 2024, when the market price is $22 per share. By what amount will Howmet's shareholder's equity be increased when the options are exercised? Multiple Choice $170 million. $782 million. $816 million. $646 million.
Under its executive stock option plan, National Corporation granted 30 million options on January 1, 2024, that permit executives to purchase 30 million of the company's $1 par common shares within the next six years, but not before December 31, 2026 (the vesting date). The exercise price is the market price of the shares on the date of grant, $33 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. Suppose that unexpected turnover during 2025 caused the forfeiture of 5% of the stock options. Compute the amount of compensation expense for 2025 and 2026. Note: Enter your answers in millions rounded to 2 decimal places (i.e., 5, 500,000 should be entered as 5.50)
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Under its executive stock option plan, Boston Corporation granted options on January 1, 2021, that permit executives to purchase 15 million of the company's $1 par common shares within the next eight 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, $18 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures were anticipated; however, unexpected turnover during 2022 caused the forfeiture of 5% of the stock options. Ignoring taxes, what is the effect on earnings in 2022? Multiple Choice -$18.5 million. -$18 million. -$19 million. -$20 million.
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On March 1, 2022, Hudson Corp. purchased a put option on shares of ICA stock. The contract was for 100 shares at a strike price of $130 per share, with an expiration date of May 31, 2022. The option contract premium (the amount paid to enter the contract at signing) was $40. On March 31, a market appraisal estimated the time value of the option to be $30. Hudson settled the option contract on May 10. Prices of ICA stock during the option period are provided below. Price of ICA stocks March 1 $130 March 31 $120 May 10 $125 At what amount would Hudson report as the value of the put option in its March 31, 2022 balance sheet? Put Option account balance as of March 31, 2022 4,000
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Under its executive stock option plan, National Corporation granted 12 million options on January 1, 2018, that permit executives to purchase 12 million of the company's $1 par common shares within the next six years, but not before December 31, 2020 (the vesting date). The exercise price is the market price of the shares on the date of grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. Suppose that the options are exercised on April 3, 2021, when the market price is $19 per share. Ignoring taxes, what journal entry will National record? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) View transaction list Journal entry worksheet 1 Record entry for options exercised on April 3, 2021, when the market price is $19 per share. Note: Enter debits before credits. Date April 03, 2021…