The following events occurred regarding the company's executive compensation plan. 2. On 1/1/x4, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 20,000 shares of common stock at $40 per share. The par value is $10 per share. 3. On 2/1/x4, options were granted to each of five executives to purchase 20,000 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/x6. It is assumed that the options were for services performed equally in 20x4 and 20x5. The Black-Scholes option pricing model determines total compensation expense to be $2,100,000. 3. At 2/1/x6, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited Prepare the journal entries for 2/1/x6
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- 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.The following events occurred at Charlotte Company surrounding stock options. Charlotte uses the fair value method of accounting for stock options. On 1/1/21 options were granted to each of four executives to purchase 5,000 shares (a total of 20,000 shares) of the company’s $2 par value common stock at a price of $25. The options were non-transferable and the executive had to remain an employee of the company through 12-31-22 to exercise the options. The options expire on 2/1/23. The Black-Scholes option pricing model determines the fair value of the options to be $1,350,000. On 4/5/22, one of the four executives resigned from the company. On 2/1/23, the remaining three executives exercised their options. Required: Prepare any necessary entries for 1/1/21, 12/31/21, 4/5/22, 12/31/22 and 2/1/23. If no entry is necessary, indicate as such.Cheng/Hamm Incorporated developed a business strategy that uses stock options as a major compensation incentive for its top executives. On January 1, 2024, 23 million options were granted, each giving the executive owning them the right to acquire five $1 par common shares. The exercise price is the market price on the grant date – $30 per share ($150 per option). Options vest on January 1, 2028. They cannot be exercised before that date and will expire on December 31, 2030. The fair value of the 23 million options, estimated by an appropriate option pricing model, is $49 per option. Ignore income tax. Cheng/Hamm's compensation expense in 2024 for these stock options was: Note: Round your answer to nearest whole dollar amount.
- Wilson Inc. developed a business strategy that uses stock options as a major compensation incentive for its top executives. • On January 1, 2018, 20 million options were granted, each giving the executive owning them the right to acquire six $1 par common shares. • The exercise price is the market price on the grant date-$10 per share. • Options vest on January 1, 2022. They cannot be exercised before that date and will expire on December 31, 2024. • The fair value of the 20 million options, estimated by an appropriate option pricing model, is $40 per option. Ignore income tax. On March 1, 2022, when the market price of Wilson's stock was $14 per share, 3 million of the options were exercised. The journal entry to record this would include: A debit to paid-in capital-stock options for $120 million All of these answer choices are correct A credit to common stock for $75 million A credit to paid-in capital-excess of par for $255 millionRotate Company adopted the following share-based compensation plans for its senior executives. Each senior executive has a unique plan basing on his/her functions in the company. The par value of Rotate’s ordinary share is P20. The following share-based grants were declared by the entity. On January 1, 2021, it granted 1,000 share options each to 200 of its employees. The exercise price of the option is P25. The vesting of said shares is conditional upon the employees staying for three years, after which they have two years to exercise such before the options expire. During 2021, 5 employees resigned and an additional 15 employees are expected to leave on the next two years. During 2022, actual resignations totalled 8 and another 10 is expected to resign next year. No employees left during 2023. Sixty percent of the share options were exercised at yearend 2024 and the balance at yearend 2025. On January 1, 2022, it granted 100 of its employees 1,000 share appreciation rights…Rotate Company adopted the following share-based compensation plans for its senior executives. Each senior executive has a unique plan basing on his/her functions in the company. The par value of Rotate’s ordinary share is P20. The following share-based grants were declared by the entity. On January 1, 2021, it granted 1,000 share options each to 200 of its employees. The exercise price of the option is P25. The vesting of said shares is conditional upon the employees staying for three years, after which they have two years to exercise such before the options expire. During 2021, 5 employees resigned and an additional 15 employees are expected to leave on the next two years. During 2022, actual resignations totalled 8 and another 10 is expected to resign next year. No employees left during 2023. Sixty percent of the share options were exercised at yearend 2024 and the balance at yearend 2025. On January 1, 2022, it granted 100 of its employees 1,000 share appreciation rights…
- Rotate Company adopted the following share-based compensation plans for its senior executives. Each senior executive has a unique plan basing on his/her functions in the company. The par value of Rotate’s ordinary share is P20. The following share-based grants were declared by the entity. On January 1, 2021, it granted 1,000 share options each to 200 of its employees. The exercise price of the option is P25. The vesting of said shares is conditional upon the employees staying for three years, after which they have two years to exercise such before the options expire. During 2021, 5 employees resigned and an additional 15 employees are expected to leave on the next two years. During 2022, actual resignations totalled 8 and another 10 is expected to resign next year. No employees left during 2023. Sixty percent of the share options were exercised at yearend 2024 and the balance at yearend 2025. How much is the ending balance of the Share Options Outstanding that will show in the 2021…Rotate Company adopted the following share-based compensation plans for its senior executives. Each senior executive has a unique plan basing on his/her functions in the company. The par value of Rotate’s ordinary share is P20. The following share-based grants were declared by the entity. On January 1, 2021, it granted 1,000 share options each to 200 of its employees. The exercise price of the option is P25. The vesting of said shares is conditional upon the employees staying for three years, after which they have two years to exercise such before the options expire. During 2021, 5 employees resigned and an additional 15 employees are expected to leave on the next two years. During 2022, actual resignations totalled 8 and another 10 is expected to resign next year. No employees left during 2023. Sixty percent of the share options were exercised at yearend 2024 and the balance at yearend 2025. On January 1, 2022, it granted 100 of its employees 1,000 share appreciation rights…Rotate Company adopted the following share-based compensation plans for its senior executives. Each senior executive has a unique plan basing on his/her functions in the company. The par value of Rotate’s ordinary share is P20. The following share-based grants were declared by the entity. On January 1, 2021, it granted 1,000 share options each to 200 of its employees. The exercise price of the option is P25. The vesting of said shares is conditional upon the employees staying for three years, after which they have two years to exercise such before the options expire. During 2021, 5 employees resigned and an additional 15 employees are expected to leave on the next two years. During 2022, actual resignations totalled 8 and another 10 is expected to resign next year. No employees left during 2023. Sixty percent of the share options were exercised at yearend 2024 and the balance at yearend 2025. How much is the ending balance of the Accrued Salaries Payable that will show in the 2021…
- The first financial instrument was a compensatory stock option plan that was granted to 12 key management positions for the first time. The company wanted to provide these employees with additional compensation and due to financial constraints could not increase salaries. The plan granted these management employees 7,500 options each to purchase shares at $40 each when they were actually worth $80. The options were granted on January 1, 2021 and were exercisable within a two year period beginning January 1, 2023 if the employee was still employed with the company at the time of exercise. A fair value options pricing model determined total compensation to be $820,000. Assume that there are no forfeitures. On January 1, 2023, two employees exercised the options. A)Show the journal entries for December 31, 2021, December 31, 2022, January 1, 2023 for ASPE and IFRS. If the entries are the same under ASPE and IFRS you can just state they are the same. The second financial instrument…Under its restricted stock unit (RSU) plan, Lin Company granted restricted stock units (RSUS) representing 5 million of its $1 par common shares to certain key executives. At vesting, recipients are given the option to receive the cash equivalent of the number of shares used to value the RSUS. Lin plans to account for these new RSUS in the same manner as described in the company's disclosure notes to its financial statements: Share-Based Compensation (in part) Share-based compensation cost for RSUS is measured based on the closing fair market value of the Company's common stock on the date of grant ... The Company reports paid-in capital and recognizes share-based compensation cost over the award's requisite service period on a straight-line basis. Which of the following is an accurate statement regarding the company's policy? Multiple Choice O The policy is appropriate as long as Peach periodically adjusts the compensation based on the change in the stock's fair value until the award…Wilson Inc. developed a business strategy that uses stock options as a major compensation incentive for its top executives. On January 1, 2021, 20 million options were granted, each giving the executive owning them the right to acquire five $1 par common shares. The exercise price is the market price on the grant date—$10 per share. Options vest on January 1, 2025. They cannot be exercised before that date and will expire on December 31, 2027. The fair value of the 20 million options, estimated by an appropriate option pricing model, is $40 per option. Ignore income tax.Wilson's compensation expense in 2021 for these stock options was: $800 million. $200 million. $400 million. $0.