o stock options were terminated during 20x4. Compute the amount of expense that should be recognized for 20x4.
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In connection with a stock option plan for the benefit of key employees, ABC Co. intends to distribute treasury shares when the options are exercised. These shares were bought in 20x3 at P42 per share. On January 1, 20x4, ABC Co. granted stock options for 100,000 shares at P38 per share as additional compensation for services to be rendered over the next 3 years. The options are exercisable during a 2-year period beginning January 1, 20x7, by grantees still employed by ABC Co. Market price of the ABC Co.’s stock was P47 per share at the grant date. The fair value of the stock option is P12 on grant date. No stock options were terminated during 20x4. Compute the amount of expense that should be recognized for 20x4.
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- JBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, JBL granted options to key officers on January 1, 2016. The options permit holders to acquire six million of the company’s $1 par common shares for $22 within the next six years, but not before January 1, 2019 (the vesting date). The market price of the shares on the date of grant is $26 per share. The fair value of the 6 million options, estimated by an appropriate option pricing model, is $6 per option. Because the plan does not qualify as an incentive plan, JBL will receive a tax deduction upon exercise of the options equal to the excess of the market price at exercise over the exercise price. The tax rate is 40%. Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. Prepare the appropriate journal entries to record compensation expense and its tax effect on…On July 1, 2024, Bonita Company adopted a stock option plan that granted options to key executives to purchase 94,000 shares of the company's $1 par value common stock. The options were granted on January 1, 2025, and were exercisable 3 years after the date of grant if the grantee was still an employee of the company. The options expired 4 years from date of grant. The option price was set at $63, and the fair value option pricing model determines the total compensation expense to be $714,000. All of the options were exercised February 1, 2028, when the market price was $77 a share. Prepare journal entries relating to the stock option plan for the years 2024 through 2028. Assume that the employee performs services equally in 2025, 2026 and 2027. (Credit account titles are automatically indented when amount is entered. Do not indent manually. 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.…On January 1, 2019, Flounder Corporation granted 9,400 options to key executives. Each option allows the executive to purchase one share of Flounder’s $5 par value common stock at a price of $20 per share. The options were exercisable within a 2-year period beginning January 1, 2021, if the grantee is still employed by the company at the time of the exercise. On the grant date, Flounder’s stock was trading at $26 per share, and a fair value option-pricing model determines total compensation to be $404,000.On May 1, 2021, 7,520 options were exercised when the market price of Flounder’s stock was $30 per share. The remaining options lapsed in 2023 because executives decided not to exercise their options.Prepare the necessary journal entries related to the stock option plan for the years 2019 through 2023. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the…
- On January 1, 2021, a company granted stock options for 89,000 shares of its $12 par value common stock to its key employees. Each option entitles the employees to purchase one share of common stock at $22. The Black-Scholes option pricing model determines total compensation expense to be $220,000. The options are exercisable beginning January 1, 2024. On January 1, 2024, when the market price of the stock was $35 per share, 5,000 options were exercised. To record the 5,000 options exercised, the company should record Cash in the amount of $__________. (if no cash amount should be recorded, then enter 0).On January 1, 2018, Hugh Morris Comedy Club (HMCC) granted 1 million stock options to key executivesexercisable for 1 million shares of the company’s common stock at $20 per share. The stock options are intendedas compensation for the next three years. The options are exercisable within a four-year period beginningJanuary 1, 2021, by the executives still in the employ of the company. No options were terminated during 2018.The market price of the common stock was $25 per share at the date of the grant. HMCC estimated the fair valueof the options at $9 each. 1% of the options are forfeited during 2019 due to executive turnover. What amountshould HMCC record as compensation expense for the year ended December 31, 2019, assuming HMCCchooses the option to record forfeitures as they actually occur?On January 1, 2024, Sherwood Company granted 97,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2026, and expire on January 1, 2030. Each option can be exercised to acquire one share of $1 par common stock for $8. An option-pricing model estimates the fair value of the options to be $3 on the date of grant. If unexpected turnover in 2025 caused the company to estimate that 15% of the options would be forfeited, what amount should Sherwood recognize as compensation expense for 2025?
- Pastore Incorporated granted options for 1 million shares of its $1 par common stock at the beginning of the current year. The exercise price is $31 per share, which was also the market value of the stock on the grant date. The fair value of the options was estimated at $9.00 per option. What would be the total compensation indicated by these options?On November 1, 2017, Windsor Company adopted a stock-option plan that granted options to key executives to purchase 19,000 shares of the company’s $10 par value common stock. The options were granted on January 2, 2018, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $328,000. All of the options were exercised during the year 2020: 4,750 on January 3 when the market price was $67, and 14,250 on May 1 when the market price was $77 a share. Prepare journal entries relating to the stock option plan for the years 2018, 2019, and 2020. Assume that the employee performs services equally in 2018 and 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and…Man of War Company adopted a stock-option plan on April 30, 2019, that provided that 500,000 shares of $10 par value stock be designated as available for the granting of options to officers of the corporation at a price of $26 a share. The market price was $20 a share on April 30, 2019.On January 2, 2020, options to purchase 40,000 shares were granted to president—15,000 for services to be rendered in 2020 and 25,000 for services to be rendered in 2021. Also on that date, options to purchase 26,000 shares were granted to chief financial officer—10,000 for services to be rendered in 2020 and 16,000 for services to be rendered in 2021. The market price of the stock was $23 a share on January 2, 2020. The options were exercisable for a period of one year following the year in which the services were rendered. The fair value of the options on the grant date was $3.20 per option. In 2021, neither the president nor the chief financial officer exercised their options because the market price…
- On November 1, 2017, Marigold Company adopted a stock-option plan that granted options to key executives to purchase 21,000shares of the company’s $10 par value common stock. The options were granted on January 2, 2018, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $39, and the fair value option-pricing model determines the total compensation expense to be $309,000. All of the options were exercised during the year 2020: 5,250 on January 3 when the market price was $66, and 15,750 on May 1 when the market price was $78 a share. Prepare journal entries relating to the stock option plan for the years 2018, 2019, and 2020. Assume that the employee performs services equally in 2018 and 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and…Modern Corporation granted 95,000 stock options to certain executives on January 1, 2022. The options are exercisable no sooner than December 31, 2024, and expire on January 1, 2028. Each option can be exercised to acquire one share of $1 par common stock for $11. An option-pricing model estimates the fair value of the options to be $5 on the date of grant. How much compensation expense should Modern recognize in 2022 as a result of this stock option grant?JBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, JBL granted options to key officers on January 1, 2024 . The options permit holders to acquire 6 million of the company's $1 par common shares for $30 within the next six years, but not before January 1, 2027 (the vesting date). The market price of the shares on the date of grant is $34 per share. The fair value of the 6 million options, estimated by an appropriate option pricing model, is $7 per option. Because the plan does not qualify as an Incentive plan, JBL will receive a tax deduction upon exercise of the options equal to the excess of the market price at exercise over the exercise price. The tax rate is 25%. Required: 1. Determine the total compensation cost pertaining to the Incentive stock option plan. 2. Prepare the appropriate journal entries to record compensation expense and its tax effect on…
