Problem 24-7 (IFRS)On January 1, 2020, Easy Company granted 30,000 share optionsto employees.The share options will vest at the end of three years providedthe employees remain in service until then.The option price is P60 and the entity's share price is also P60at the date of grant. The par value of the share is P50.At the date of grant, the entity concluded that the fair valueof the share options cannot be estimated reliably.The share options have a life of 6 years. This means that theoptions can be exercised within three years after vesting.All share options vested at the end of three years and noemployees left during the three-year period.The share prices and the number of share options exercisedare set out below.Share priceShare options exercised at year-end20206320216620227510,00015,0005,0002023882024100202590Required:1. Determine the compensation expense for each year from2020 to 2025 using the intrinsic value method.2. Prepare journal entries to record the compensationeach year and the exercise of the share options.expense907CS Scanned with CamScanner

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Answered: Problem 24-7 (IFRS) On January 1, 2020,…

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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On January 1, 2018, M Company granted 90,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2020, and expire on January 1, 2024. Each option can be exercised to acquire one share of $1 par common stock for $12. An option-pricing model estimates the fair value of the options to be $5 on the date of grant. If unexpected turnover in 2019 caused the company to estimate that 15% of the options would be forfeited, what amount should M recognize as compensation expense for 2019?
On November 1, 2025, Columbo Company adopted a stock-option plan that granted options to key executives to purchase 30,000 shares of the company's $10 par value common stock. The options were granted on January 2, 2026, 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 $450,000. All of the options were exercised during the year 2029: 20,000 on January 3 when the market price was $67, and 10,000 on May 1 when the market price was $77 a share. Prepare journal entries relating to the stock option plan for the years 2026, 2027, and 2028. Assume that the employee performs services equally in 2026 and 2027. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is…
Fortune Brands granted options on January 1, 2024, that allows the recipient to purchase 15.0 million of the company's $1 par common shares within the next eight years, but not before December 31, 2026 (the vesting date). The exercise price is the market price of the shares on the date of grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. Ignoring taxes, what is the effect on earnings in the year after the options are granted to executives? Note: Round your answer to 1 decimal place. Multiple Choice O $60.0 million $90.0 million $0 $20.0 million
Modern Corporation granted 95,000 stock options to certain executives on January 1, 2022. The options are exercisable no sooner than December 31, 2024, and expire on January 1, 2028. Each option can be exercised to acquire one share of $1 par common stock for $11. An option-pricing model estimates the fair value of the options to be $5 on the date of grant. How much compensation expense should Modern recognize in 2022 as a result of this stock option grant?
Problem 24. On January 1, 2015, ID Inc. granted to an employee the right to choose either: a. 12,000 share (Share or Equity Alternative) (Share options) b. Cash payment equal to market value of 10,000 shares (Cash Alternative) (Share appreciation rights) The grant is conditional upon the completion of three years of service. If the employee chooses the share alternative, the shares must be held for three years after vesting date. The par value of the shares is P25 and at grant date on January 1, 2015, the share price is P51. The share prices for the three-year vesting period are P54 on December 31, 2015, P60 on December 31, 2016 and P65 on December 31, 2017. After taking into account the effects of post-vesting restrictions, the entity has estimated that the fair value of the share or equity alternatives is P48 per share. Required: Based on the result of your audit, determine the following: 1. Compensation expense for year 2015 2. Compensation expense for year 2016 3. Compensation…

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