The Red Fox Corporation granted 100 share options to each of its 200 employees on January 1,2020.The option plan Based on an option pricing model used by Red Fox, the fair value of the option on January 1,2020 was determined to be P 32. The plan further provides that the employees should be in the service of the company until at least December 31,2022.The options are exercisable starting January 1,2023 and expire on December 31,2024. At January 1,2020, it was estimated that 15% of the employees who received the options will resign during the next three years. During 2020, 10 employees left the company. Át December 31,2020, 15 employees were expected to leave before December 31,2022. During 2021, 12 more employees left, and at the end of the year, it was expected that 5 more would resign before December 31,2022; although 8 employees left during 2022. Employees numbering 140 exercised their options during 2023; another 10 employees exercised their options during 2024. The rest of the options expired. REQUIRED: a.) Compute the compensation expense resulting from share options for the years 2020, 2021 and 2022. b.) Prepare entries for the years 2023 and 2024.

The Red Fox Corporation granted 100 share options to each of its 200 employees on January 1,2020.The option plan Based on an option pricing model used by Red Fox, the fair value of the option on January 1,2020 was determined to be P 32. The plan further provides that the employees should be in the service of the company until at least December 31,2022.The options are exercisable starting January 1,2023 and expire on December 31,2024. At January 1,2020, it was estimated that 15% of the employees who received the options will resign during the next three years. During 2020, 10 employees left the company. Át December 31,2020, 15 employees were expected to leave before December 31,2022. During 2021, 12 more employees left, and at the end of the year, it was expected that 5 more would resign before December 31,2022; although 8 employees left during 2022. Employees numbering 140 exercised their options during 2023; another 10 employees exercised their options during 2024. The rest of the options expired. REQUIRED: a.) Compute the compensation expense resulting from share options for the years 2020, 2021 and 2022. b.) Prepare entries for the years 2023 and 2024.

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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