On January 1, 2020, Panic Company granted to a senior executive 30,000 share options, conditional upon the executive's remaining in the entity's employ until December 31, 2022. The par value per share is P50. The exercise price is P 100. However, the exercise price drops to P80 if the entity's earnings increase by at least an average of 10% per year over the three-year period. On grant date, the entity estimated that the fair value of the share option is P30 if the exercise price is P80. If the exercise price is P 100, the fair value of the share option is P 25. During 2020 and 2021, the earnings increased by 11% and 12% respectively. However, during 2022, the earnings increased only by 4%. What amount should be recognized as compensation expense for 2022? a. 300,000 b. 600,000 c. 150,000 d. 750,000

On January 1, 2020, Panic Company granted to a senior executive 30,000 share options, conditional upon the executive's remaining in the entity's employ until December 31, 2022. The par value per share is P50. The exercise price is P 100. However, the exercise price drops to P80 if the entity's earnings increase by at least an average of 10% per year over the three-year period. On grant date, the entity estimated that the fair value of the share option is P30 if the exercise price is P80. If the exercise price is P 100, the fair value of the share option is P 25. During 2020 and 2021, the earnings increased by 11% and 12% respectively. However, during 2022, the earnings increased only by 4%. What amount should be recognized as compensation expense for 2022? a. 300,000 b. 600,000 c. 150,000 d. 750,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 7RE: On January 1, 2019, Phoenix Corporation adopts a performance-based share option plan for 25...

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On January 1, 2019, Phoenix Corporation adopts a performance-based share option plan for 25 executives, with the number of shares based on the yearly increase in sales. At the end of 2019, based on a 10% increase in sales, it expects that each executive will be granted 150 options and that the fair value of an option expected to vest is 15.75. Phoenix expects a turnover rate of 15% over the 3-year service period. Determine the compensation expense for 2019 for this plan.
On January 1, 2020, Baxcon Company granted to a senior executive 33,000 share options, conditional upon the executive's remaining in the entity's employ until December 31, 2022. The par value per share is P50. The exercise price is P100. However, the exercise price drops to P80 if the entity's earnings increase by at least an average of 10% per year over the three-year period. On grant date, the entity estimated that the fair value of the share option is P30 if the exercise price is P80. If the exercise price is P100, the fair value of the share option is P25. During 2020 and 2021, the earnings increased by 11% and 12% respectively. However, during 2022, the earnings increased only by 4%. What amount should be recognized as compensation expense in 2022?
On January 1, 2020, ABC Company granted share options to each of the 300 employees working in the Accounting department. The options price is P90 and the par value is P70 per share.The share options vest at the end of a three-year period provided that the employees remain in the entity’s employ and provided the volume of sales will increase by 10% per year.The fair value of each share option on grant date is P35.The share will vest as follows: If the sales increase by 10%, each employee will receive 200 share options; If the sales increase by 15%, each employee will receive 300 share options.· On December 31, 2020, the sales increased by 10%, and no employees have left the entity· On December 31, 2021, sales increased by 15% and no employees have left.On December 31, 2022, the sales increased by 15% and 50 employees left the entityWhat is the share premium upon exercise of the share options on December 31, 2022?
On January 1, 2020, ABC Company granted share options to each of the 300 employees working in the Accounting department. The options price is P90 and the par value is P70 per share.The share options vest at the end of a three-year period provided that the employees remain in the entity’s employ and provided the volume of sales will increase by 10% per year. The fair value of each share option on grant date is P35. The share will vest as follows: If the sales increase by 10%, each employee will receive 200 share options; If the sales increase by 15%, each employee will receive 300 share options. · On December 31, 2020, the sales increased by 10%, and no employees have left the entity· On December 31, 2021, sales increased by 15% and no employees have left.On December 31, 2022, the sales increased by 15% and 50 employees left the entityWhat is the compensation expense for 2022?
On January 1, 2020, Ruby Red Company granted to each of its four executives the right to choose either 1,000 ordinary shares or to receive cash payment equal to 900 shares. The grant is conditional upon the complecion of three years of service. The entity estimates that the value of the share alternative on January 1,2020 is P 150 per share. Ruby Red's ordinary share capital has a par value P 100. The following table shows the fair value of Ruby Red's ordinary share: January 1,2020 P P 158 December 31, 2020 160 December 31, 2021 165 December 31, 2022 168 December 31, 2023 172 One executive exercise his right to receive the cash alternative on December 31, 2022; the others chose to receive the ordinary shares on December 31, 2023. REQUIRED: a.) Determine the amount assigned to equity on January 1,2020. b.) Compute the amount charged to Compensation Expense during the years 2020, 2021,2022 and 2023 as a result of the foregoing. c.) Prepare all the entries relating to the above during the…
On January 1, 2022, Jade Corporation granted share options to each of the 300 employees working in the sales department. The share options vest at the end of a three-year period provided that the employees remain in the entity’s employ and provided the volume of sales will increase by more than 10% per year. The fair value of each share option on grant date is P20. If the sales increase by more than 10%, each employee will receive 200 share options. If the sales increase by more than 15%, each employee will receive 300 share options. On December 31, 2022, the sales increased by more than 10%, and no employees have left the entity. On December 31, 2023, the sales increased by more than 15% and 20 employees left the entity. What amount of compensation expense should be recognized for 2023? 400,000 720,000 560,000 800,000
*see attached problem REQUIRED: What is the share premium upon exercise of the share options on Dec. 31, 2023?
On April 1, 2020, an entity subject to IFRS grants 60,000 share options to its employees. Each option has an exercise price of $18, and the fair value of the share options are estimated at $340,000. The vesting period ends on December 31, 2022, and the exercise period ends on December 31, 2023. On December 31, 2020, management estimates that 88% of the options will vest. On December 31, 2021, that estimate changes to 85%. What is the compensation expense on this share option plan for the year ended December 31, 2021? Question 14 options: a) $92,934 b) $93,783 c) $102,309 d) $105,091
2. On January 1, 2019, an entity granted 60,000 share options to employees. The share options vest at the end of three years provide the employees remain in service until then. The option price is P60 and the par value is P50. At the date of grant, the entity concluded that the fair value of the share options cannot be measured reliably. The share options can be exercised within one year after vesting. The share prices are P62 on December 31, 2019, P66 on December 31, 2020, P75 on December 31, 2021 and P85 on December 31, 2022. All options were exercised on December 31, 2022. • What is the compensation expense for 2021? 3. An entity began operations January 1, 2015 and reported the following net income or loss for five years of operations. 2015 P1 500 000 Loss 2016 1 300 000 Loss 2017 1 200 000 Loss 2018 4 500 000 Income 2019 9 000 000 Income On December 31, 2019, the capital accounts were: Preference share capital, P100
On January 1, 2020, ABC Company granted 80,000 share options to employees. The share options will vest at the end of three years provided the employees remain in service until then. The option price is P65 and the par value per share is P50.At the date of grant, the entity concluded that the fair value of the share options cannot be measured reliably.The share options have a life of 4 years which means that the share options can be exercised within one year after vesting. The share prices are P68 on December 31, 2020, P74 on December 31, 2021, P82 on December 31, 2022 and P90 on December 31, 2023. All share options were exercised on December 31, 2023.What is the compensation expense for 2022?
Corinthians granted 5,000 share options to employees at an exercise price of P5 per share. The grant date is January 1, 2021 and the options are subject to a two –year vesting period. The grant date fair value of each option was P40. At December 31, 2021, Corinthians Company modified the grant by extending the vesting period to June 30, 2023. Management expects that the number of options outstanding as of December 31, 2022, the original vesting date, would be 4,500. The actual number of options outstanding at December 31, 2022 was 4,200 of which only 4,000 vested on June 30, 2023. Compensation expense for 2021 – 2023
On January 1, 2024, Ball Brothers Enterprises (BBE) granted restricted stock units (RSUS) representing 40 million of its $1 par common shares to executives, subject to forfelture If employment is terminated within four years. After the recipients of the RSUS satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $10 per share on the grant date. At the date of grant, BBE anticipated that 5% of the recipients would leave the firm prior to vesting. Ignore taxes. Required: 1. Prepare the appropriate journal entry to record compensation expense on December 31, 2024. 2. Prepare the appropriate journal entry to record compensation expense on December 31, 2025. 3. During 2026, BBE revised its estimate of forfeltures from 5% to 10%. Prepare the appropriate Journal entry to record compensation expense on December 31, 2026. 4. Prepare the appropriate journal entry to record compensation expense on December 31, 2027.