Wilson's compensation expense in 2021 for these stock options was: $800 million. $200 million. $400 million. $0.
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Wilson's compensation expense in 2021 for these stock options was:
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$800 million.
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$200 million.
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$400 million.
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$0.
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- At the recent shareholders' meeting in June 2022, the CEO of a small bank proposed a plan to offer each of its employees 250 incentive options for Class A common stock. The key provisions of the plan are that employees must exercise the options between January 2023 and December 2028, and if an employee terminates their employment with the bank (or is terminated), the options are no longer exercisable. As CEO, how would you defend the stock option plan to the shareholders? Please give an explanation.Mezzo was promoted as Finance Director of a Hong Kong listed company in April 2019. As a senior member of staff, she was given 1.5 million share options at an exercise price of $0.20 per share exercisable within two years from 1 April 2020. The shares were trading at $0.50 on that date. The share price of the company surged recently to $1.20 per share, at which time Mezzo exercised half of the options. Her stockbroker sold the shares at an average price of $1.00 per share. How much will be included as her assessable income in respect of the share options for the year of assessment 2020/21? Select one: a. $600,000 b. $750,000 c. $1,500,000 d. $450,000 Clear my choiceJBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, JBL granted options to key officers on January 1, 2021. The options permit holders to acquire 9 million of the company's $1 par common shares for $30 within the next six years, but not before January 1, 2024 (the vesting date). The market price of the shares on the date of grant is $34 per share. The fair value of the 9 million options, estimated by an appropriate option pricing model, is $6 per option. Because the plan does not qualify as an incentive plan, JBL will receive a tax deduction upon exercise of the options equal to the excess of the market price at exercise over the exercise price. The tax rate is 25%.Required:1. Determine the total compensation cost pertaining to the incentive stock option plan.2. Prepare the appropriate journal entries to record compensation expense and its tax effect on…
- Barron Company granted 8 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $3 per share on January 1, 2021, the grant date. When calculating diluted EPS at December 31, 2022, what will be the net increase in the denominator of the EPS fraction if the market price of the common shares averaged $4 per share during 2022? A. 6 million B. 2.67 million C. 2 million D. 8 millionOn November 1, 2019, Sheridan Corp. adopted a stock option plan that granted options to key executives to purchase 42,300 common shares. The options were granted on January 2, 2020, and were exercisable two years after the date of grant if the grantee was still a company employee; the options expire six years from the date of grant. The option price was set at $39, and total compensation expense was estimated to be $541,000. Note that the calculation did not take forfeitures into account. On April 1, 2021, 3,300 options were terminated when some employees resigned from the company. The fair value of the shares at that date was $26. All of the remaining options were exercised during the year 2022: 29,600 on January 3 when the fair value was $49, and 9,400 on May 1 when the fair value was $55 a share. Assume that the entity follows ASPE and has chosen not to reflect forfeitures in its upfront estimate of compensation expense. (a) Prepare journal entries relating to the stock option plan…On January 1, 2024, Jingrong Corporation granted stock options to key employees for the purchase of 81,000 shares of the company's common stock at $28 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2026, by the grantees still in the employ of the company. No options were terminated during 2024, but the company does have an experience of 6% forfeitures over the life of the stock options. The market price of the common stock was $34 per share at the date of the grant. Jingrong Corporation used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Jingrong charge to compensation expense for the year ended December 31, 2024? Multiple Choice $405,000 $810,000 $380,700 $761,400
- On January 1, 2021, Howmet Aerospace granted options that permit executives to purchase 34 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, $19 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. No forfeitures are anticipated. The options are exercised on April 2, 2024, when the market price is $22 per share. By what amount will Howmet's shareholder's equity be increased when the options are exercised? Multiple Choice $170 million. $782 million. $816 million. $646 million.SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2021. The options permit holders to acquire 10 million of the company’s $1 par common shares for $24 within the next six years, but not before January 1, 2024 (the vesting date). The market price of the shares on the date of grant is $26 per share. The fair value of the 10 million options, estimated by an appropriate option pricing model, is $7.20 per option. Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan.2. & 3. Prepare the appropriate journal entries to record compensation expense on December 31, 2021, 2022, and 2023. Record the exercise of the options if all of the options are exercised on May 11, 2025, when the market price is $27 per share.As part of its stock-based compensation package, International Electronics granted 12 million stock appreciation rights (SARs) to top officers on January 1, 2024. At exercise, holders of the SARs are entitled to receive cash or stock equal in value to the excess of the market price at exercise over the share price at the date of grant. The SARs cannot be exercised until the end of 2027 (vesting date) and expire at the end of 2029. The $1 par common shares have a market price of $48 per share on the grant date. The fair value of the SARs, estimated by an appropriate option pricing model, is $2.50 per SAR at January 1, 2024. The fair value re-estimated at December 31, 2024, 2025, 2026, 2027, and 2028, is $3.50, $2.50, $4, $2.50, and $4.00, respectively. All recipients are expected to remain employed through the vesting date. Required: 1. to 3. Prepare the appropriate journal entries pertaining to the SARs on January 1, 2024 and December 31, 2024–December 31, 2027. The SARs remain…
- Witter House is a calendar-year firm with 300 million common shares outstanding throughout 2024 and 2025. As part of its executive compensation plan, at January 1, 2023, the company had issued 30 million executive stock options permitting executives to buy 30 million shares of stock for $10 within the next eight years, but not prior to January 1, 2026. The fair value of the options was estimated on the grant date to be $3 per option. In 2024, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 15 million restricted common shares to senior executives at January 1, 2024. The shares vest three years later. The fair value of the stock was $12 per share on the grant date. The average price of the common shares was $12 and $15 during 2024 and 2025, respectively. The stock options qualify as an incentive plan. The restricted stock does not. The company's net income was $150 million and $160 million in 2024 and 2025,…Please help meOn January 1, 2024, Fanny Services granted 24 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. The common shares have a market price of $10 per share on the grant date. Ignoring taxes, what is the effect of the award of restricted stock units on 2024 earnings? O $0 million. O $60 million. O $24 million. O $240 million.
