Hanshaben Under its executive stock option plan, National Corporation granted 18 million options on January 1, 2024, that permit executives topurchase 18 million of the company's $1 par common shares within the next six years, but not before December 31, 2026 (the vestingdate). The exercise price is the market price of the shares on the date of grant, $15 per share. The fair value of the options, estimatedby an appropriate option pricing model, is $2 per option. Suppose that unexpected turnover during 2025 caused the forfeiture of 5%of the stock options.Compute the amount of compensation expense for 2025 and 2026.Note: Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50)Compensation expense($ in millions)20252026

1. **Total Options Granted**: National Corporation granted 18 million stock options on January 1,…

Answered: Under its executive stock option plan,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Under its executive stock option plan, National Corporation granted 30 million options on January 1, 2024, that permit executives to purchase 30 million of the company's $ 1 par common shares within the next six years, but not before December 31, 2026 (the vesting date). The exercise price is the market price of the shares on the date of grant, $19 per share. The fair value of the options, estimated by an appropriate option pricing model, is $3 per option. Suppose that unexpected turnover during 2025 caused the forfeiture of 5% of the stock options. Compute the amount of compensation expense for 2025 and 2026. Note: Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50)
Under its executive stock option plan, National Corporation granted 12 million options on January 1, 2024, that permit executives to purchase 12 million of the company's $1 par common shares within the next six years, but not before December 31, 2026 (the vesting date). The exercise price is the market price of the shares on the date of grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. Suppose that unexpected turnover during 2025 caused the forfeiture of 5% of the stock options. Compute the amount of compensation expense for 2025 and 2026. Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Compensation expense ($ in millions) 2025 2026
Under its executive stock option plan, National Corporation granted 12 million options on January 1, 2018, thatpermit executives to purchase 12 million of the company’s $1 par common shares within the next six years, butnot before December 31, 2020 (the vesting date). The exercise price is the market price of the shares on the dateof grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 peroption. No forfeitures are anticipated. Ignoring taxes, what is the total compensation cost pertaining to the stockoptions? What is the effect on earnings in the year after the options are granted to executives?
Under its executive stock option plan, ABC Corp. granted 30 million options on January 1, 2021, that permit executives to purchase 30 million of the company's $1 par common shares within the next six years, but not before December 31, 2023. • The exercise price is the market price of the shares on the date of grant, $30 per share. • The fair value of the options as of grant date, estimated by an appropriate option pricing model, is $2 per option. • Assume no forfeitures. Required: 1. Provide the journal entry for compensation expense on December 31, 2021. 2. Provide the journal entry for compensation expense on December 31, 2022. 3. Provide the journal entry for compensation expense on December 31, 2023. 4. Suppose that all 30 million options are exercised on April 3, 2024, when the market price is $35 per share. Provide the journal entry for exercise of the options. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter…
Under its executive stock option plan, National Corporation granted 29 million options on January 1, 2021, that permit executives to purchase 29 million of the company’s $1 par common shares within the next eight years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $33 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. Suppose that the options expire without being exercised. Ignoring taxes, what journal entry will National record? Record entry for the options that expired without being exercised.
Under its executive stock option plan, National Corporation granted 30 million options on January 1, 2021, that permit executives to purchase 30 million of the company’s $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $31 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. Suppose that the options are exercised on April 3, 2024, when the market price is $38 per share. Ignoring taxes, what journal entry will National record? Record entry for options exercised on April 3, 2024, when the market price is $38 per share.
Under its executive stock option plan, National Corporation granted 21 million options on January 1, 2021, that permit executives to purchase 21 million of the company’s $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $26 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. Suppose that unexpected turnover during 2022 caused the forfeiture of 5% of the stock options. Compute the amount of compensation expense for 2022 and 2023. (Enter your answers in millions rounded to 2 de Answer is not complete. Compensation expense ($ in millions) 2022 2023 cimal places (i.e., 5,500,000 should be entered as 5.50))
Under its executive stock option plan, Mining Co. granted options on January 1, 2021, that permit executives to purchase 15 million of the company's $1 par common shares within the next eight years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $22 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. The options are exercised on April 2, 2024, when the market price is $21 per share. By what amount will the shareholders' equity increase when 100% of those options are exercised? O $60 million $270 million O $315 million. O $330 million
Under its executive stock option plan, National Corporation granted 12 million options on January 1, 2021, that permit executives to purchase 12 million of the company’s $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. No forfeitures are anticipated. Ignoring taxes, what is the total compensation cost pertaining to the stock options? What is the effect on earnings in the year after the options are granted to executives?
Under its executive stock option plan, National Corporation granted 10 million options on January 1, 2021, that permit executives to purchase 10 million of the company’s $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $14 per share. The fair value of the options, estimated by an appropriate option pricing model, is $3 per option. No forfeitures are anticipated. 1. Ignoring taxes, what is the total compensation cost pertaining to the stock options?2. Ignoring taxes, what is the effect on earnings in the year after the options are granted to executives?
Under its executive stock option plan, Boston Corporation granted options on January 1, 2021, that permit executives to purchase 15 million of the company's $1 par common shares within the next eight years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $18 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures were anticipated; however, unexpected turnover during 2022 caused the forfeiture of 5% of the stock options. Ignoring taxes, what is the effect on earnings in 2022? Multiple Choice -$18.5 million. -$18 million. -$19 million. -$20 million.
Under its executive stock option plan, National Corporation granted 12 million options on January 1, 2018, that permit executives to purchase 12 million of the company's $1 par common shares within the next six years, but not before December 31, 2020 (the vesting date). The exercise price is the market price of the shares on the date of grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. Suppose that the options are exercised on April 3, 2021, when the market price is $19 per share. Ignoring taxes, what journal entry will National record? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) View transaction list Journal entry worksheet 1 Record entry for options exercised on April 3, 2021, when the market price is $19 per share. Note: Enter debits before credits. Date April 03, 2021…

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