Under its stock option plan, Ameri Corp. granted 3 million stock options to employees on January 1, 2021. The fair value of each option is $5 and no forfeitures are anticipated. Each option permits an employee to purchase one share of $1 par common stock within the next six years, but not before December 31, 2023 (the vesting date), at an exercise price of $12 per share (the market price of the shares on the grant date). On April 3, 2024, all options are exercised when the market price is $35 per share. The journal entry Ameri would record on April 3, 2024 would include: Multiple Choice a debit to Cash for $105,000,000. a debit to Paid-in capital-stock options for $5,000,000. a debit to Compensation Expense for $15,000,000. a credit to Paid-in capital-excess of par for $48,000,000.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Under its stock option plan, Ameri Corp. granted 3 million stock options to employees on
January 1, 2021. The fair value of each option is $5 and no forfeitures are anticipated.
Each option permits an employee to purchase one share of $1 par common stock within
the next six years, but not before December 31, 2023 (the vesting date), at an exercise
price of $12 per share (the market price of the shares on the grant date). On April 3, 2024,
all options are exercised when the market price is $35 per share.
The journal entry Ameri would record on April 3, 2024 would include:
Multiple Choice
a debit to Cash for $105,000,000.
a debit to Paid-in capital-stock options for $5,000,000.
a debit to Compensation Expense for $15,000,000.
a credit to Paid-in capital-excess of par for $48,000,000.
Transcribed Image Text:Under its stock option plan, Ameri Corp. granted 3 million stock options to employees on January 1, 2021. The fair value of each option is $5 and no forfeitures are anticipated. Each option permits an employee to purchase one share of $1 par common stock within the next six years, but not before December 31, 2023 (the vesting date), at an exercise price of $12 per share (the market price of the shares on the grant date). On April 3, 2024, all options are exercised when the market price is $35 per share. The journal entry Ameri would record on April 3, 2024 would include: Multiple Choice a debit to Cash for $105,000,000. a debit to Paid-in capital-stock options for $5,000,000. a debit to Compensation Expense for $15,000,000. a credit to Paid-in capital-excess of par for $48,000,000.
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