Schmidt Electronics offered an incentive stock plan to its employees. On January 1, Year 1, 100,000 options were granted for 100,000 $1 par common shares. The exercise price equals the $6 market price of the common stock on the grant date. The vesting period is 3 years. The options cannot be exercised before January 1, Year 4, and expire on December 31, Year 5. Each option has a value of $3 based upon an option pricing model. What is the entry to record the expiration of 15% of the options on December 31, Year 5? OA. APIC-Stock Options 45,000 Compensation Expense 45,000 OB. APIC- Stock Options 45,000 APIC-Expired Stock Options 45,000 OC. APIC-Stock Options 45,000 Retained Earnings 45,000 OD. Stock Options Receivable 75,000 Common Stock 25,000 APIC 50,000

Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter15: Shareholders’ Equity: Capital Contributions And Distributions
Section: Chapter Questions
Problem 18E
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Schmidt Electronics offered an incentive stock plan to its employees. On January 1, Year 1, 100,000 options were granted for 100,000 $1 par common shares. The exercise price equals the $6 market price of the
common stock on the grant date. The vesting period is 3 years. The options cannot be exercised before January 1, Year 4, and expire on December 31, Year 5. Each option has a value of $3 based upon an
option pricing model.
What is the entry to record the expiration of 15% of the options on December 31, Year 5?
OA. APIC-Stock Options
45,000
Compensation Expense
45,000
OB. APIC- Stock Options
45,000
APIC-Expired Stock Options
45,000
OC. APIC-Stock Options
45,000
Retained Earnings
45,000
OD. Stock Options Receivable
75,000
Common Stock
25,000
APIC
50,000
Transcribed Image Text:Schmidt Electronics offered an incentive stock plan to its employees. On January 1, Year 1, 100,000 options were granted for 100,000 $1 par common shares. The exercise price equals the $6 market price of the common stock on the grant date. The vesting period is 3 years. The options cannot be exercised before January 1, Year 4, and expire on December 31, Year 5. Each option has a value of $3 based upon an option pricing model. What is the entry to record the expiration of 15% of the options on December 31, Year 5? OA. APIC-Stock Options 45,000 Compensation Expense 45,000 OB. APIC- Stock Options 45,000 APIC-Expired Stock Options 45,000 OC. APIC-Stock Options 45,000 Retained Earnings 45,000 OD. Stock Options Receivable 75,000 Common Stock 25,000 APIC 50,000
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