2 On November 1, 2022, Crane Corp. adopted a stock option plan that granted options to key executives to purchase 49,800 commonshares. The options were granted on January 2, 2023, and were exercisable two years after the date of grant if the grantee was still acompany employee; the options expire six years from the date of grant. The option price was set at $37, and total compensationexpense was estimated to be $522,000. Note that the calculation did not take forfeitures into account.On April 1, 2024, 3,900 options were terminated when some employees resigned from the company. The fair value of the shares atthat date was $25. All of the remaining options were exercised during the year 2025: 34,900 on January 3 when the fair value was $47,and 11,000 on May 1 when the fair value was $53 a share. Assume that the entity follows ASPE and has chosen not to reflectforfeitures in its upfront estimate of compensation expense.(a)Prepare journal entries relating to the stock option plan for the years 2023, 2024, and 2025. Assume that the employees performservices equally in 2023 and 2024, and that the year end is December 31. (Credit account titles are automatically indented when theamount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry"for the account titles and enter O for the amounts. List all debit entries before credit entries. Round answers to O decimal places, e.g. 5,275. Donot round intermediate calculations.)

Employees Stock Option Plan -Employee stock ownership plans, often known as employee stock option…

November 1, 2022, Crane Corp. adopted a stock option plan that granted options to key executives to purchase 49 ares. The options were granted on January 2, 2023, and were exercisable two years after the date of grant if the gra mpany employee; the options expire six years from the date of grant. The option price was set at $37, and total com pense was estimated to be $522,000. Note that the calculation did not take forfeitures into account. April 1, 2024, 3,900 options were terminated when some employees resigned from the company. The fair value of at date was $25. All of the remaining options were exercised during the year 2025: 34,900 on January 3 when the fa d 11,000 on May 1 when the fair value was $53 a share. Assume that the entity follows ASPE and has chosen not to feitures in its upfront estimate of compensation expense.

November 1, 2022, Crane Corp. adopted a stock option plan that granted options to key executives to purchase 49 ares. The options were granted on January 2, 2023, and were exercisable two years after the date of grant if the gra mpany employee; the options expire six years from the date of grant. The option price was set at $37, and total com pense was estimated to be $522,000. Note that the calculation did not take forfeitures into account. April 1, 2024, 3,900 options were terminated when some employees resigned from the company. The fair value of at date was $25. All of the remaining options were exercised during the year 2025: 34,900 on January 3 when the fa d 11,000 on May 1 when the fair value was $53 a share. Assume that the entity follows ASPE and has chosen not to feitures in its upfront estimate of compensation expense.

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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Question

On November 1, 2022, Crane Corp. adopted a stock option plan that granted options to key executives to purchase 49,800 common
shares. The options were granted on January 2, 2023, and were exercisable two years after the date of grant if the grantee was still a
company employee; the options expire six years from the date of grant. The option price was set at $37, and total compensation
expense was estimated to be $522,000. Note that the calculation did not take forfeitures into account.
On April 1, 2024, 3,900 options were terminated when some employees resigned from the company. The fair value of the shares at
that date was $25. All of the remaining options were exercised during the year 2025: 34,900 on January 3 when the fair value was $47,
and 11,000 on May 1 when the fair value was $53 a share. Assume that the entity follows ASPE and has chosen not to reflect
forfeitures in its upfront estimate of compensation expense.
(a)
Prepare journal entries relating to the stock option plan for the years 2023, 2024, and 2025. Assume that the employees perform
services equally in 2023 and 2024, and that the year end is December 31. (Credit account titles are automatically indented when the
amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry"
for the account titles and enter O for the amounts. List all debit entries before credit entries. Round answers to O decimal places, e.g. 5,275. Do
not round intermediate calculations.)

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