On January 1, 2018, SARS Co. grants 100 cash share appreciation rights to each of its 500 employees, on condition that the employees remains employed in the company for the next three years. During 2018, 30 employees leave. The entity estimates that a further 60 will leave during 2019 and 2020. During 2019, 20 employees leave and the entity estimates that a further 27 will leave during 2020. During 202, 18 employees leave. At the end of 2020, 100 employees exercise their share appreciation rights, another 150 employees exercise their share appreciation rights at the end of 2021 and the remaining employees exercise their share appreciation rights at the end of 2022. The entity estimates the fair value of the share appreciation rights at the end of each year in which a liability exists as shown below. At the end of 2020, all share appreciation rights held by the remaining employees vest. The intrinsic values of the share appreciation rights at the date exercise (which equal to the cash paid out) at the end of years 2020,2021, and 2022 are also shown below:

On January 1, 2018, SARS Co. grants 100 cash share appreciation rights to each of its 500 employees, on condition that the employees remains employed in the company for the next three years. During 2018, 30 employees leave. The entity estimates that a further 60 will leave during 2019 and 2020. During 2019, 20 employees leave and the entity estimates that a further 27 will leave during 2020. During 202, 18 employees leave. At the end of 2020, 100 employees exercise their share appreciation rights, another 150 employees exercise their share appreciation rights at the end of 2021 and the remaining employees exercise their share appreciation rights at the end of 2022. The entity estimates the fair value of the share appreciation rights at the end of each year in which a liability exists as shown below. At the end of 2020, all share appreciation rights held by the remaining employees vest. The intrinsic values of the share appreciation rights at the date exercise (which equal to the cash paid out) at the end of years 2020,2021, and 2022 are also shown below:

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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In order to boost the sales of Leila & Co., the board of directors approved a share appreciation plan for its Chief Operating Officer. The plan was granted on January 1, 2020 and is exercisable for one year beginning January 1, 2022, provided that the COO is still employed at the date of its exercise. The plan compensates the COO for a cash payment equal to the excess of Leila’s share price over the pre-determined price of P50. Equivalent shares to be granted will be dependent upon the level of annual sales of the company on the date of exercise, as follows:· 100 million to 200 million sales: 10,000 shares· Over 200 million sales: 12,000 sharesActual sales achieved by Leila, and the share price of the company’s shares at the end of each year are below (SEE PICTURE BELOW):How much should the company recognized as compensation expense for 2020 and 2021, respectively? a. 135,000 ; 165,000 b. 270,000 ; 30,000 c. 385,000 ; 515,000 d. 770,000 ; 900,000
On December 31, 2016, Ferris Corporation granted 10,000 shares of its $1 par value common stock to its employees. The shares are restricted until 2 years of employment is completed (December 31, 2018). Market price of the common stock on that date of grant was $40 per share. Assume that 10 percent of the employees left (before vesting) on January 1, 2018, and 90 percent of the employees completed the vesting requirements on December 31, 2018. Use the Common Stock (Restricted) and the Deferred Compensation accounts as illustrated in the homework. 1. The journal entry to record the recognition of compensation expense on December 31, 2017 2. The journal entry on January 1, 2018 to record the forfeiture on 10 percent of the restricted shares (because the employees did not stay until vested) 3. The journal entries on December 31, 2018 to (1) recognize the remaining compensation expense, and (2) to award the restricted stock to the 90 percent of the employees who vested.
On January 1, 2022, Ron Corp. granted stock options to key employees for the purchase of 80,000 shares of the company's common stock at $25 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2024, by the grantees still in the employ of the company. No options were terminated during 2022, but the company does have an experience of 4% forfeitures over the life of the stock options. The market price of the common stock was $31 per share at the date of the grant. G Corp. used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Ron charge to compensation expense for the year ended December 31, 2022? A. $307,200. B. $320,000. C. $384,000. D. $400,000.
On January 1, 2020 Sams Company granted Jim Norman, an employee, an option to buy 300 shares of Sams stock for $40 per share. The option is exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $4,800. The market value for each share of stock is $55 a share. The service period for the stock compensation is for two years beginning January 1, 2020. Record the journal entries for 2020 and 2021.
Nadal Company has 20 executives to whom it grants compensatory share options on January 1, 2019. At that time, it grants each executive the right to purchase 100 shares of its $5 par common stock at $40 per share after a 3-year service period. The value of each option is estimated to be $10.25 on the grant date. Based on its average employee turnover rate each year, Nadal expects that 2 executives will not vest in the plan. At the end of 2021, Nadal confirms that the actual turnover was the same as expected. On January 5, 2022, 3 executives exercise their options. Required: Prepare Nadal’s journal entries for 2019 through 2022 in regard to its compensatory share option plan.
On June 1, 2020, ABC Company granted share options to key employees for the purchase of 42,000 of company’s ordinary share capital at P25 per share. Based on an Black-Scholes option pricing model used by the company, the fair value of each share option on this date was P10. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning July 1, 2022 by grantees still in the employ of the company. The market price of Tool’s ordinary shares was P40 per share at the date of grant. No share options were terminated during the year. How much should ABC’s share to compensation expense for the year ended December 31, 2020?
On January 1, 2019, an entity granted 100 share options each to 500 employees, conditional upon the employee'sremaining in the entity's employ during the vesting period. The share options vest at the end of a three-year period. Ongrant date, each share option has a fair value of P30. The par value per share is P100 and the option price is P120. OnDecember 31, 2020, 30 employees have left and it is expected that on the basis of a weighted average probability, afurther 30 employees will leave before the end of the three-year period. On December 31, 2021, only 20 employeesactually left and all of the share options are exercised on such date. 26. What amount was credited to share premium when the options were exercised on December 31, 2021?a. 2,250,000 c. 900,000b. 2,350,000 d. 0 PROVIDE COMPUTATION
Nadal Company has 20 executives to whom it grants compensatory share options on January 1, 2019. At that time, it grants each executive the right to purchase 120 shares of its $5 par common stock at $40 per share after a 3-year service period. The value of each option is estimated to be $8.50 on the grant date. Based on its average employee turnover rate each year, Nadal expects that 2 executives will not vest in the plan. At the end of 2021, Nadal confirms that the actual turnover was the same as expected. On January 5, 2022, 5 executives exercise their options. Required: Prepare Nadal’s journal entries for 2019 through 2022 in regard to its compensatory share option plan.
On January 1, 2021, Sarasota Inc. granted stock options to officers and key employees for the purchase of 23,000 shares of the company’s $10 par common stock at $27 per share. The options were exercisable within a 5-year period beginning January 1, 2023, by grantees still in the employ of the company, and expiring December 31, 2027. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be $359,400.On April 1, 2022, 2,300 options were terminated when the employees resigned from the company. The market price of the common stock was $35 per share on this date.On March 31, 2023, 13,800 options were exercised when the market price of the common stock was $41 per share.Prepare journal entries to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2021, 2022, and 2023. (Credit account titles…
Nadal Company has 20 executives to whom it grants compensatory share options on January 1, 2019. At that time, it grants each executive the right to purchase 90 shares of its $5 par common stock at $41 per share after a 3-year service period. The value of each option is estimated to be $8.75 on the grant date. Based on its average employee turnover rate each year, Nadal expects that 2 executives will not vest in the plan. At the end of 2021, Nadal confirms that the actual turnover was the same as expected. On January 5, 2022, 3 executives exercise their options.Required: Prepare Nadal's journal entries for 2019 through 2022 in regard to its compensatory share option plan.
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On January 1, 2020 (the date of grant), Windsor Corporation issues 2,300 shares of restricted stock to its executives. The fair value of these shares is $51,000, and their par value is $11,500. The stock is forfeited if the executives do not complete 3 years of employment with the company. Prepare journal entries for January 1, 2020, and on December 31, 2020, assuming the service period is 3 years. (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.) Date 1/1/20 12/31/20 Account Titles and Explanation Debit Credit