Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 72 million $1 par common shares. The exercise price is the market price on the grant date-$8 per share. Options cannot be exercised prior to January 1, 2023, and expire December 31, 2027. The fair value of the 72 million options, estimated by an appropriate option pricing model, is $1 per option. Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. to 5. Prepare the appropriate journal entries to record compensation expense on December 31, 2021 and 2022. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share and the entry on December 31, 2027, when the remaining options that have vested expire without being exercised. Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 5 Prepare the appropriate journal entries to record compensation expense on December 31, 2021 and 2022. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share and the entry on December 31, 2027, when the remaining options that have vested expire without being exercised. (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).)
Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 72 million $1 par common shares. The exercise price is the market price on the grant date-$8 per share. Options cannot be exercised prior to January 1, 2023, and expire December 31, 2027. The fair value of the 72 million options, estimated by an appropriate option pricing model, is $1 per option. Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. to 5. Prepare the appropriate journal entries to record compensation expense on December 31, 2021 and 2022. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share and the entry on December 31, 2027, when the remaining options that have vested expire without being exercised. Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 5 Prepare the appropriate journal entries to record compensation expense on December 31, 2021 and 2022. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share and the entry on December 31, 2027, when the remaining options that have vested expire without being exercised. (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).)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
I need req. 3 And 5 Please Solve with Explanation and Do not give image format
Transcribed Image Text:Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for
72 million $1 par common shares. The exercise price is the market price on the grant date-$8 per share. Options cannot be exercised
prior to January 1, 2023, and expire December 31, 2027. The fair value of the 72 million options, estimated by an appropriate option
pricing model, is $1 per option.
Required:
1. Determine the total compensation cost pertaining to the incentive stock option plan.
2. to 5. Prepare the appropriate journal entries to record compensation expense on December 31, 2021 and 2022. Prepare the
appropriate journal entry to record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share and
the entry on December 31, 2027, when the remaining options that have vested expire without being exercised.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 to 5
Prepare the appropriate journal entries to record compensation expense on December 31, 2021 and 2022. Prepare the appropriate
journal entry to record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share and the entry on
December 31, 2027, when the remaining options that have vested expire without being exercised. (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 2
3
Record the exercise of 75% of the options on March 12, 2023, when the
market price is $9 per share.
Note: Enter debits before credits.
Date
March 12, 2023
Record entry
4
General Journal
Paid-in capital - stock options
Paid-in capital - excess of par
Clear entry
< Req 1
Debit
72
Credit
View general journal
Req 2 to 5 >
Show less A
Transcribed Image Text:Journal entry worksheet
< 1 2 3 4
Record expiration of options.
Note: Enter debits before credits.
Date
December 31, 2027
Record entry
General Journal
Clear entry
< Req 1
Debit
Credit
View general journal
Req 2 to 5 >
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