On January 1, 2021, Ellison Company granted Sam Wine, an employee, an option to buy 1,000 shares of Ellison Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $6,000. Wine exercised his option on October 1, 2021 and sold his 1,000 shares on December 1, 2021. Quoted market prices of Ellison Co. stock in 2021 were: July 1 October 1 December 1 $30 per share $36 per share $40 per share The service period is for three years beginning January 1, 2021. As a result of the option granted to Wine, using the fair value method, Ellison should recognize compensation expense for 2021 on its books in the amount of a) $6,000 b) s2,000

On January 1, 2021, Ellison Company granted Sam Wine, an employee, an option to buy 1,000 shares of Ellison Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $6,000. Wine exercised his option on October 1, 2021 and sold his 1,000 shares on December 1, 2021. Quoted market prices of Ellison Co. stock in 2021 were: July 1 October 1 December 1 $30 per share $36 per share $40 per share The service period is for three years beginning January 1, 2021. As a result of the option granted to Wine, using the fair value method, Ellison should recognize compensation expense for 2021 on its books in the amount of a) $6,000 b) s2,000

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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Darius Inc. granted 200,000 stock options to its employees. The options expire 10 years after the grant date of January 1, 2021. The share price was $23 when the options were issued. Employees who are still with the company five years after the grant date may exercise the options to purchase shares at $45 per share. A consultant has estimated the value of each option on the grant date to be $2.50 per option. How much compensation expense should Darius Inc. record in 2021? Question 5 options: $460,000 $500,000 $880,000 $100,000
On January 1, 2020, ABC Company granted the president compensatory share options to buy 10,000 shares of P100 par value. The options call for a price of P140 per share and are exercisable for four years following the grant date. The president exercised the options on December 31, 2020. The market price of the share was P150 on January 1, 2020 and P180 on December 31, 2020. The fair value of a similar share option with the same terms was P50 on the grant date.What is the compensation expense for 2020?
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On July 1, 2024, Flounder Company adopted a stock option plan that granted options to key executives to purchase 112,000 shares of the company's $1 par value common stock. The options were granted on January 1, 2025, and were exercisable 3 years after the date of grant if the grantee was still an employee of the company. The options expired 4 years from date of grant. The option price was set at $69, and the fair value option pricing model determines the total compensation expense to be $660,000. All of the options were exercised February 1, 2028, when the market price was $77 a share. Prepare journal entries relating to the stock option plan for the years 2024 through 2028. Assume that the employee performs services equally in 2025, 2026 and 2027. (Credit account titles are automatically indented when amount is entered. Do not incent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries.…
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