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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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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