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.

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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2024, Donnelly Company granted 97,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2026, and expire on January 1, 2030. Each option can be exercised to acquire one share of $1 par common stock for $9. An option-pricing model estimates the fair value of the options to be $3 on the date of grant. What amount should Donnelly recognize as compensation expense for 2024? Note: Round your answer to the nearest dollar amount.
Company A has issued stock options to an employee that vest based on only continued service in installments. The employee was granted 300 options, 100 vest if the employee continues in service for one year, a further 100 vest after two years and the final 100 vest after three years. The fair value of the options is $9 per share. The company has determined that the service period for purposes of attributing the expense to the period of service is three years. What would be the amortization expense in the second year of the arrangement under IFRS? a. $900 b $1,650 c. $1,800 d. $750
On January 1, 2021, a company granted stock options for 89,000 shares of its $12 par value common stock to its key employees. Each option entitles the employees to purchase one share of common stock at $22. The Black-Scholes option pricing model determines total compensation expense to be $220,000. The options are exercisable beginning January 1, 2024. On January 1, 2024, when the market price of the stock was $35 per share, 5,000 options were exercised. To record the 5,000 options exercised, the company should record Cash in the amount of $__________. (if no cash amount should be recorded, then enter 0).
The first financial instrument was a compensatory stock option plan that was granted to 12 key management positions for the first time. The company wanted to provide these employees with additional compensation and due to financial constraints could not increase salaries. The plan granted these management employees 7,500 options each to purchase shares at $40 each when they were actually worth $80. The options were granted on January 1, 2021 and were exercisable within a two year period beginning January 1, 2023 if the employee was still employed with the company at the time of exercise. A fair value options pricing model determined total compensation to be $820,000. Assume that there are no forfeitures. On January 1, 2023, two employees exercised the options. A)Show the journal entries for December 31, 2021, December 31, 2022, January 1, 2023 for ASPE and IFRS. If the entries are the same under ASPE and IFRS you can just state they are the same. The second financial instrument…
On January 1, 2024, Sherwood Company granted 97,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2026, and expire on January 1, 2030. Each option can be exercised to acquire one share of $1 par common stock for $8. An option-pricing model estimates the fair value of the options to be $3 on the date of grant. If unexpected turnover in 2025 caused the company to estimate that 15% of the options would be forfeited, what amount should Sherwood recognize as compensation expense for 2025?
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.
Prepare any necessary journal entries for Red Robin's stock-based compensation plan for 2022. Red Robin granted 67,200 employee stock options on January 1, 2021. The options give the employees the right to acquire 67,200 shares of Red Robin's common stock for an exercise price of $21.65 per share. The market price on the date of grant was $21.65. The required vesting period is 2 years, so the options vest on December 31 of the current year (2022). The options have a 7-year expiration period. Additional information is below: Fair Value Actual Forfeitures Estimated Forfeiture Rate 12/31/2021 $5.65 Total compensation expense at fair value Percentage of Options Expected to vest Expected total compensation expense Cumulative rate of amortization Cumulative compensation expense Expense recognized in prior years Current year compensation expense 5% 12/31/2022 $6.25 850 4% 12/31/2021 389,760 95% 370,272 50% 185,136 185,136 12/31/2022 389,760 96% 374,170 100% 374,170 185,136 189,034
On November 1, 2017, Windsor Company adopted a stock-option plan that granted options to key executives to purchase 19,000 shares of the company’s $10 par value common stock. The options were granted on January 2, 2018, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $328,000. All of the options were exercised during the year 2020: 4,750 on January 3 when the market price was $67, and 14,250 on May 1 when the market price was $77 a share. Prepare journal entries relating to the stock option plan for the years 2018, 2019, and 2020. Assume that the employee performs services equally in 2018 and 2019. (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…
On March 1, 2022, Hudson Corp. purchased a put option on shares of ICA stock. The contract was for 100 shares at a strike price of $130 per share, with an expiration date of May 31, 2022. The option contract premium (the amount paid to enter the contract at signing) was $40. On March 31, a market appraisal estimated the time value of the option to be $30. Hudson settled the option contract on May 10. Prices of ICA stock during the option period are provided below. Price of ICA stocks March 1 $130 March 31 $120 May 10 $125 At what amount would Hudson report as the value of the put option in its March 31, 2022 balance sheet? Put Option account balance as of March 31, 2022 4,000
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.
On January 1, 2021, M Company granted 95,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2023, and expire on January 1, 2027. Each option can be exercised to acquire one share of $1 par common stock for $13. An option-pricing model estimates the fair value of the options to be $4 on the date of grant. What amount should M recognize as compensation expense for 2021? (Round your answer to the nearest dollar amount.)