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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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
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.
At January 1, 2021, the company had issued 40,000 executive stock options permitting executives to buy 40,000 shares of stock for $25. The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting). The fair value of the options is estimated as follows: Vesting Date Amount Vesting Fair Value per Option Dec. 31, 2021 20 % 2$ Dec. 31, 2022 30 % 2$ 8 Dec. 31, 2023 50 % $ 12 What is the compensation expense related to the options to be recorded in 2021? O $48,000. $96,000. O $128,000. O $184,000.
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?
Cheng/Hamm Incorporated developed a business strategy that uses stock options as a major compensation incentive for its top executives. On January 1, 2024, 23 million options were granted, each giving the executive owning them the right to acquire five $1 par common shares. The exercise price is the market price on the grant date – $30 per share ($150 per option). Options vest on January 1, 2028. They cannot be exercised before that date and will expire on December 31, 2030. The fair value of the 23 million options, estimated by an appropriate option pricing model, is $49 per option. Ignore income tax. Cheng/Hamm's compensation expense in 2024 for these stock options was: Note: Round your answer to nearest whole dollar amount.
Orange Inc. issued 20,000 nonqualified stock options valued at $20,000 (in total). The options vest over two years-half in 2019 (the year of issue) and half in 2020. One thousand options are exercised in 2020 with a bargain element on each option of $6. What is the 2020 book-tax difference associated with the stock options? Part I: A) $15,000 favorable B) $ 6,000 favorable C) $15,000 unfavorable D) $ 4,000 unfavorable Part II: What is the permanent difference related to this exercise of 1,000 option?
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