On July 1, 2020, Paulina, Inc. granted share options to executives, which options allow them to purchase 20,000 ordinary shares at 25 per share. The options will vest provided that the executives will be employed in the company for the next two years. The options can be exercised for a one-year period starting July 1, 2022. By end of 2020, the market price of Paulina’s ordinary share as P33 per share. The fair value of the options cannot be reliably determined. All executives are expected to remain in the company for the whole vesting period. How much should Paulina charge to compensation expense for the year ended December 31, 2020? a. P0 b. P40,000 c. P80,000 d. P160,000
On July 1, 2020, Paulina, Inc. granted share options to executives, which options allow them to purchase 20,000 ordinary shares at 25 per share. The options will vest provided that the executives will be employed in the company for the next two years. The options can be exercised for a one-year period starting July 1, 2022. By end of 2020, the market price of Paulina’s ordinary share as P33 per share. The fair value of the options cannot be reliably determined. All executives are expected to remain in the company for the whole vesting period. How much should Paulina charge to compensation expense for the year ended December 31, 2020? a. P0 b. P40,000 c. P80,000 d. P160,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 1, 2020, Paulina, Inc. granted share options to executives, which options allow them to purchase 20,000 ordinary shares at 25 per share. The options will vest provided that the executives will be employed in the company for the next two years. The options can be exercised for a one-year period starting July 1, 2022. By end of 2020, the market price of Paulina’s ordinary share as P33 per share. The fair value of the options cannot be reliably determined. All executives are expected to remain in the company for the whole vesting period. How much should Paulina charge to compensation expense for the year ended December 31, 2020?
a. P0
b. P40,000
c. P80,000
d. P160,000
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