Employee Stock Options, Liability-Classified Awards, Journal Entries after Grant Date. The Goldwick Company awarded 1 000 options to acquire 1 000 shares of its common stock, which can be sold back to the company. The options vest over 3 years. The market price and the exercise price were both equal to $12 per share on the date of the grant. At the grant date the options have a fair value of $15 each. Prepare the
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- On January 1, 2025, Splish Corporation granted 1,800 shares of restricted-stock units. The par value of the stock is $5 per share. The market price (fair value) of the stock is $64 per share on the date of grant. The period of benefit is 2 years. Prepare Splish's journal entries for December 31, 2025 and 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Record journal entries in the order presented in the problem.) Date 12/31/25 12/31/26 12/31/26 12/31/25 12/31/26 12/31/26 Account Titles and Explanation Unearned Compensation Paid-in Capital in Excess of Par - Common Stock Compensation Expense Unearned Compensation (To record compensation expense) Compensation Expense Unearned Compensation Paid-in Capital in Excess of Par - Common Stock Compensation Expense Unearned Compensation (To record…arrow_forwardOn January 1, Year 1, Lasagna Corporation granted to an employee the right to choose either shares or cash payment. The choices are as follows: •Share alternative – equal to 25,000 shares with par value of P30 •Cash alternative – cash payment equal to the market value of 20,000 shares The grant is conditional upon the completion of three years of service. On grant date, on January 1, Year 1, the share price is P51. The share prices for the three-year vesting period are P54 on December 31, Year 1, P66 on December 31, Year 2 and P65 on December 31, Year 3. After taking into account the effect of vesting restrictions, the entity has estimated that the fair value of the share alternative is P48. What is the share premium if the employee has chosen the share alternative on December 31, Year 3? A. 750,000 B. 880,000 C. 550,000 D. 730,000arrow_forwardOn January 1, Year 1, Lasagna Corporation granted to an employee the right to choose either shares or cash payment. The choices are as follows: •Share alternative – equal to 25,000 shares with par value of P30 •Cash alternative – cash payment equal to the market value of 20,000 shares The grant is conditional upon the completion of three years of service. On grant date, on January 1, Year 1, the share price is P51. The share prices for the three-year vesting period are P54 on December 31, Year 1, P66 on December 31, Year 2 and P65 on December 31, Year 3. After taking into account the effect of vesting restrictions, the entity has estimated that the fair value of the share alternative is P48. What is the share premium if the employee has chosen the cash alternative on December 31, Year 3? A. 730,000 B. 0 C. 700,000 D. 180,000arrow_forward
- On January 1, Year 1, Lasagna Corporation granted to an employee the right to choose either shares or cash payment. The choices are as follows: •Share alternative – equal to 25,000 shares with par value of P30 •Cash alternative – cash payment equal to the market value of 20,000 shares The grant is conditional upon the completion of three years of service. On grant date, on January 1, Year 1, the share price is P51. The share prices for the three-year vesting period are P54 on December 31, Year 1, P66 on December 31, Year 2 and P65 on December 31, Year 3. After taking into account the effect of vesting restrictions, the entity has estimated that the fair value of the share alternative is P48. What is the compensation expense for Year 3? A. 480,000 B. 600,000 C. 580,000 D. 420,000arrow_forwardOn January 1, Year 1, Spaghetti Corp. granted 100 share options each to 500 employees, conditional upon the employee’s remaining in the entity’s employ during the vesting period. The share options vest at the end of a three-year period. On grant date, each share option has a fair value of P30. The par value per share is P100 and the option price is P120. On December 31, Year 2, 30 employees have left and it is expected that on the basis of a weighted average probability, a further 30 employees will leave before the end of the three-year period. On December 31, Year 3, only 20 employees actually left and all of the share options are exercised on such date. What is the compensation expense for Year 3? A. 880,000 B. 470,000 C. 380,000 D. 500,000arrow_forward2. ABC Corporation (a public company) establishes an employee stock option plan on January 1, year 1. The plan allows its employees to acquire 10,000 shares of its P1 par value common stock at P52 per share, when the market price is also P52. The options may not be exercised until five years from the grant date. The grant-date fair value of an option with similar terms and conditions is P8.62. Compensation expense at the end of year 1 is Answer:arrow_forward
- bhaarrow_forwardOn July 1, 2019, Windsor Company adopted a stock-option plan that granted options to key executives to purchase 86,000 shares of the company’s $1 par value common stock. The options were granted on January 1, 2020, and were exercisable 3 years after the date of grant if the grantee was still an employee of the company. The options expired 4 years from date of grant. The option price was set at $63, and the fair value option-pricing model determines the total compensation expense to be $612,000.All of the options were exercised February 1, 2023, when the market price was $75 a share.Prepare journal entries relating to the stock option plan for the years 2019 through 2023. Assume that the employee performs services equally in 2020, 2021 and 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round intermediate calculations to 5 decimal places,…arrow_forwardOn January 1, 2018, Permission to Dance Inc. grants to an employee the right to choose either 1,000 phantom shares (i.e. a right to a cash payment equal to the fair value of 1,000 shares) or 1,200 shares with a par value of P10 per share. The grant is conditional upon the completion of three years’ service. If the employee chooses the share alternative, the shares must be held for three years after the vesting date. At the date of grant, the entity’s share price is P50 per share. At the end of year 2018, 2019 and 2020, the share price is P52, P55 and P60, respectively. The entity does not expect to pay dividends in the next three years. After taking into account the effects of the post-vesting transfer restrictions, the entity estimates that the grant date fair value of the share alternative is P48 per share. If the employee has chosen the cash alternative, the amount to be paid at the end of 2020 should be?arrow_forward
- On January 1, Year 1, Jenny Corp. granted 60,000 share options to employees. The share options will vest at the end of three years provided the employees remain in service until then. The option price is P60 and the par value per share is P50. At the date of grant, the entity concluded that the fair value of the share options cannot be measured reliably. The share options have a life of 4 years which means that the share options can be exercised within one year after vesting. The share prices are P62 on December 31, Year 1, P66 on December 31, Year 2, P75 on December 31, Year 3 and P85 on December 31, Year 4. All share options were exercised on December 31, Year 4. 1. What is the compensation expense for Year 4? A. 0 B. 900k C. 600k D. 660karrow_forwardSettings On May 1, 2021, Roger Rabbit Company adopted a stock-option plan that granted options to key executives to purchase 8,000 shares of the company's $10 par value common stock. The options were granted on January 1, 2022 and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 5 years from date of grant. The option price was set at $30, and the fair value option-pricing model determines the total compensation expense to be $189,000. All of the options were exercised during the year 2024: 3,400 on January 3 when the market price was $38, and 4,600 on May 1 when the market price was $42 a share. Prepare journal entry relating to the stock option plan for the year 2023. Assume that the employee performs services equally in 2022 and 2023. O Debit Compensation Expense $94,500; Credit Paid-in Capital-Stock Options $94,500 O Debit Compensation Expense $189,000; Credit Paid-in Capital-Stock Options $189,000 O Debit…arrow_forwardOn January 1, 2020, Crane Corporation granted 5,200 options to executives. Each option entitles the holder to purchase one share of Crane's $5 par value common stock at $50 per share at any time during the next 5 years. The market price of the stock is $66 per share on the date of grant. The fair value of the options at the grant date is $136,000. The period of benefit is 2 years. Prepare Crane's journal entries for January 1, 2020, and December 31, 2020 and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)arrow_forward