On 1/1/2013, a company grants 1,000 options to its CEO with an exercise price of $40 as compensation. The options vest after two years and expire after 10 years. The stock price is $40 on the grant date. The fair value of the options is $20 per share at the grant date. How much compensation expense for stock options will the company recognize in fiscal year 2013? $20,000 $40,000 $0 $10,000 $13,500 O O

On 1/1/2013, a company grants 1,000 options to its CEO with an exercise price of $40 as compensation. The options vest after two years and expire after 10 years. The stock price is $40 on the grant date. The fair value of the options is $20 per share at the grant date. How much compensation expense for stock options will the company recognize in fiscal year 2013? $20,000 $40,000 $0 $10,000 $13,500 O O

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 1, 2016, Farmer Fabrication issued stock options for 100,000 shares to a division manager. The options have an estimated fair value of $6 each. To provide additional incentive for managerial achievement, the options are not exercisable unless Farmer Fabrication’s stock price increases by 5% in three years. Farmer initially estimates that it is not probable the goal will be achieved. How much compensation will be recorded in each of the next three years?
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Bells, Inc.'s board authorized 150,000 stock options for the company's design team. The options can only be used to purchase shares of Bells, Inc's common stock for $9 per share and will vest in 3 years. Assuming that the options were authorized on January 1st of 2023, that the fair value of the options is $6, and that the company's tax rate is 20%, what will the amount of the net tax effect of these options in 2023? (NIE 15)$300,000$120,000$180,000$60,000
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On January 1, 2020, 50 executives were given a performance-based share option plan that would award them with a maximum of 300 shares of $10 par common stock for $20 a share. On the grant date, the fair value of an option was $16.50. The number of options that will vest depends on the size of the annual average increase in sales over the next three years according to the following table: Annual Average Increase in Sales No. of Shares Greater than 5% 50 Greater than 10% 150 Greater than 15% 300 On the grant date, the company estimates the annual average sales increase will be 14%. Refer to Exhibit 15-6. The estimated total compensation cost will be a. $123,750. b. $27,500. c. $55,000. d. $247,500.
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Murray Compensation, Inc. issued 100,000 employee share options on 1/1/2016. The grand-date market price is $18 per share, exercise price is also $18 per share, and the fair value of the options is $9 per share. The vesting period is 3 years. How much stock option compensation should be record for the first year (2016)? Due to the significant decrease in stock price, the fair value of the option dropped to $4 per share as of 1/1/18. As a result, Murray decreased the exercise price of the option to from $18 to $12 per share. With the re-pricing, the fair value is now $6 per share. How much additional compensation should be recorded for 2018? How much total compensation should be recorded for 2018?
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