On January 1, 2020, The Red Hot Company established a share option plan for its selected senior employees. A total of 30,000 options were granted that permit said employees to purchase 30,000 shares of P 20 par ordinary share capital at P 35 per share. Options are exercisable beginning on January 1,2023 and can be exercised anytime from January 1,2023 through December 31,2024. At January 1, 2020, the market price for the Red Hot Company share option was P 8, based on an option pricing model used by the entity. All, but 2,000 share options were exercised on December 31,2023. REQUIRED: a) Computation of compensation expense for years 2020, 2021 and 2022. b) Entries as a result of the foregoing for year 2020 through 2023, inclusive.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On January 1, 2020, The Red Hot Company established a share option plan for its selected senior employees. A 
total of 30,000 options were granted that permit said employees to purchase 30,000 shares of P 20 par ordinary 
share capital at P 35 per share. Options are exercisable beginning on January 1,2023 and can be exercised 
anytime from January 1,2023 through December 31,2024.
At January 1, 2020, the market price for the Red Hot Company share option was P 8, based on an option pricing 
model used by the entity. All, but 2,000 share options were exercised on December 31,2023.
REQUIRED:
a) Computation of compensation expense for years 2020, 2021 and 2022.
b) Entries as a result of the foregoing for year 2020 through 2023, inclusive.

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