On 1 July 2023 Cooloola Ltd provided 1 million options to its chief executive officer. The options were valued at $1.00 each and allowed the chief executive officer to acquire shares in Cooloola Ltd for $7 each. The chief executive officer is not permitted to exercise the options before 30 June 2025 but may then exercise them at any time between 1 July 2025 and 30 June 2026. The market price of the Cooloola Ltd shares on 1 July 2023 was $6.50. On 31 December 2025 the share price reaches $7.70, and the chief executive officer decides to exercise her options and acquire the shares in Cooloola Ltd. Required: Account for the issue and exercise of the options in Cooloola Ltd.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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24. On 1 July 2023 Cooloola Ltd provided 1 million options to its chief executive officer. The options were valued at $1.00 each and allowed the chief executive officer to acquire shares in Cooloola Ltd for $7 each. The chief executive officer is not permitted to exercise the options before 30 June 2025 but may then exercise them at any time between 1 July 2025 and 30 June 2026. The market price of the Cooloola Ltd shares on 1 July 2023 was $6.50.

On 31 December 2025 the share price reaches $7.70, and the chief executive officer decides to exercise her options and acquire the shares in Cooloola Ltd.

Required:

Account for the issue and exercise of the options in Cooloola Ltd. 

 

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