Identifying and Analyzing Financial Statement Effects of Stock-Based CompensationThe stockholders' equity of Aspen Corporation at December 31, 2019, follows.7% Preferred stock, $100 par value, 20,000 shares authorized;4,000 shares issued and outstandingCommon stock, $15 par value, 300,000 shares authorized;30,000 shares issued and outstandingPaid-in capital in excess of par value-preferred stockPaid-in capital in excess of par value-common stock.Retained earningsTotal stockholders' equityThe following transactions, among others, occurred during the following year.• Employees exercised 12,000 stock options that were granted in 2015 and had a three-year vesting period. These optionshad an estimated fair value of $2 at the grant date, and an exercise price of $16. There were no other vested or unvestedoptions after this exercise.• Awarded 1,000 shares of stock to new executives, when the stock price was $36.• Sold 10,000 shares to employees under the company-wide stock purchase plan. Under the plan, employees purchasedthe shares at a 10% discount when the stock price was $33 per share.• Granted 40,000 new stock options, with a strike price of $34 and an estimated fair value of $6. The options vest overthree years.$400,000450,00036,000360,000325,000$1,571,000RequiredPrepare the December 31, 2019, statement of stockholders' equity assuming that the company reports 2019 pretaxincome of $483,000 before the effects of stock-based compensation. Assume the company has a 35% tax rate.

Shareholders' equity, often termed as the book value of a corporation, encapsulates the entirety of…

Answered: The following transactions, among…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Anderson Steel Company began 2021 with 500,000 shares of common stock outstanding. On March 31, 2021, 160,000 new shares were sold at a price of $70 per share. The market price has risen steadily since that time to a high of $75 per share at December 31. No other changes in shares occurred during 2021, and no securities are outstanding that can become common stock. However, there are two agreements with officers of the company for future issuance of common stock. Both agreements relate to compensation arrangements reached in 2020. The first agreement grants to the company president a right to 32,000 shares of stock each year the closing market price is at least $73. The agreement begins in 2022 and expires in 2025. The second agreement grants to the controller a right to 37,000 shares of stock if she is still with the firm at the end of 2029. Net income for 2021 was $4,200,000. Required: Compute Anderson Steel Company's basic and diluted earnings per share for the year ended December…
rr
Mechforce, Incorporated had net income of $171,200 for the year ended December 31, 2022. At the beginning of the year, 16,000 shares of common stock were outstanding. On April 1, an additional 17,000 shares were issued. On October 1, the company purchased 6,000 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Mechforce paid the annual dividend on the 8,000 shares of 3.35%, $100 par value preferred stock that were outstanding the entire year. Required: Calculate basic earnings per share of common stock for the year ended December 31, 2022. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
One million (1,000,000) shares of stock were issued to the founders of a start-up company on January 1, 2019. On July 1, 2019, the firm raised $500,000 from outside investors and issued 500,000 of convertible preferred stock with a conversion price of $1 per share (ROUND 1). At the time capital was raided, the investors insisted on a FIVE YEAR vesting schedule for the founders’ initial equity interest, with vesting on a monthly basis (1/60 of the founders’ interest vests each month); and weighted average anti-dilution protection in the case of a subsequent DOWN ROUND. Operations during the first eighteen months have been sluggish, and the company needs additional capital to continue operations and grow the firm’s sales and value. A second set of outside investors is willing to provide $1,300,000 in return for 2,000,000 shares of convertible preferred stock (ROUND 2). For purposes of this problem, today is July 1, 2020. One million (1,000,000) shares of stock were issued to the…
June Inc. issued 9,000 nonqualified stock options valued at $27,000 (in total--$3 each). Each option entitles the holder to purchase one share of stock at $5 per share. The options vest over three years - one-third in 2016 (the year of issue), one-third in 2017, and one-third in 2018. Three thousand options are exercised in 2017 at a time when the stock price of the stock is $9. What is the 2017 book-tax difference associated with the stock options (assume ASC 718 applies to the options)? $3,000 favorable $1,500 unfavorable $6,000 favorable $4,500 favorable |
Alpesh
Edward Corporation is authorized to issue 100,000 shares of $1 par value common stock. During 2021, Edward Corporation took part in the following selected transactions. Prepare journal entry(entries) for following independent event. 1. Purchased 10,000 shares of treasury stock at $50 per share. The treasury shares purchased were issued in 2019 at $31 per share. Assuming Edward uses the retirement method to prepare entry and before this transaction the company had $120,000 credit balance of Paid-in capital – shares repurchase and $1,500,000 retained earnings. 2. The board votes a 3-for-1 stock split. At the date, the market value is $52. 3. The board votes a 120% stock dividend. At the date, the market value is $55, assuming the company treats the distribution as "large" stock dividends effected in the form of a stock dividend and before this transaction the company has 330,000 shares of common stock.
Man of War Company adopted a stock-option plan on April 30, 2019, that provided that 500,000 shares of $10 par value stock be designated as available for the granting of options to officers of the corporation at a price of $26 a share. The market price was $20 a share on April 30, 2019.On January 2, 2020, options to purchase 40,000 shares were granted to president—15,000 for services to be rendered in 2020 and 25,000 for services to be rendered in 2021. Also on that date, options to purchase 26,000 shares were granted to chief financial officer—10,000 for services to be rendered in 2020 and 16,000 for services to be rendered in 2021. The market price of the stock was $23 a share on January 2, 2020. The options were exercisable for a period of one year following the year in which the services were rendered. The fair value of the options on the grant date was $3.20 per option. In 2021, neither the president nor the chief financial officer exercised their options because the market price…
Blue Cab Company had 50,000 shares of common stock outstanding on January 1, 2018. On April 1, 2018, the company issued 20,000 shares of common stock. The company had outstanding fully vested incentive stock options for 5,000 shares exercisable at $10 that had not been exercised by its executives. The end-of-year market price of common stock was $13 while the average price for the year was $12. The company reported net income in the amount of $269,915 for 2018. What is the diluted earnings per share (rounded)?
Murray Compensation, Inc. issued 100,000 employee share options on 1/1/2016. The grand-date market price is $18 per share, exercise price is also $18 per share, and the fair value of the options is $9 per share. The vesting period is 3 years. How much stock option compensation should be record for the first year (2016)? Due to the significant decrease in stock price, the fair value of the option dropped to $4 per share as of 1/1/18. As a result, Murray decreased the exercise price of the option to from $18 to $12 per share. With the re-pricing, the fair value is now $6 per share. How much additional compensation should be recorded for 2018? How much total compensation should be recorded for 2018?
On January 1, 2021, a company had 125,000 issued shares and 25,000 treasury shares. During the year, 13,000 treasury shares were reissued. Right after the reissuance of the treasury shares, the company declared a 3-for-1 split. In December 2021, additional 5,000 shares were purchased and placed in treasury. Determine the number of shares issued.

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS