Prepare the necessary entries from 1/1/17 through 2/1/19 for the following events using the fair value method. 1.) On 1/1/17, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 30,000 shares of common stock at $40 per share. The par value is $10 per share 2.) On 2/1/17, options were granted to each of five executives to purchase 30,000 shares. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on 2/1/19. It is assumed that the options were for services performed equally in 2017 and 2018. The Black-Scholes option-pricing model determines the total compensation expense to be $3,200,000. 3.) On 2/1/19, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited.
Prepare the necessary entries from 1/1/17 through 2/1/19 for the following events using the fair value method.
1.) On 1/1/17, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 30,000 shares of common stock at $40 per share. The par value is $10 per share
2.) On 2/1/17, options were granted to each of five executives to purchase 30,000 shares. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on 2/1/19. It is assumed that the options were for services performed equally in 2017 and 2018. The Black-Scholes option-pricing model determines the total compensation expense to be $3,200,000.
3.) On 2/1/19, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
