Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 40 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 40 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).) Show lessA View transaction list Journal entry worksheet 3 4 > 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 General Journal Debit Credit March 12, 2023 Record entry Clear entry View general journal
Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 40 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 40 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).) Show lessA View transaction list Journal entry worksheet 3 4 > 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 General Journal Debit Credit March 12, 2023 Record entry Clear entry View general journal
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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
40 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 40 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).)
Show lessA
View transaction list
Journal entry worksheet
3
4
>
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
General Journal
Debit
Credit
March 12, 2023
Record entry
Clear entry
View general journal
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