29. On January 1, 2017, Denner Company granted stock options to officers and key employees for the purchase of 10,000 shares of the company's $1 par common stock at $20 per share as additional compensation for services to be rendered over the next three years. The options are exercisable during a five-year period beginning January 1, 2020 by grantees still employed by Porter. The Black-Sholes option pricing model determines total compensation expense to be $90,000. The market price of common stock was $20 per share at the date of grant. The journal entry to record the compensation expense related to these options for 2017 would include a credit to the Paid-in Capital-Stock Options account for a. $0. b. $18,000. c. $20,000. d.$30,000 e. $90,000

29. On January 1, 2017, Denner Company granted stock options to officers and key employees for the purchase of 10,000 shares of the company's $1 par common stock at $20 per share as additional compensation for services to be rendered over the next three years. The options are exercisable during a five-year period beginning January 1, 2020 by grantees still employed by Porter. The Black-Sholes option pricing model determines total compensation expense to be $90,000. The market price of common stock was $20 per share at the date of grant. The journal entry to record the compensation expense related to these options for 2017 would include a credit to the Paid-in Capital-Stock Options account for a. $0. b. $18,000. c. $20,000. d.$30,000 e. $90,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 7E

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On January 1, 2019, Phoenix Corporation adopts a performance-based share option plan for 25 executives, with the number of shares based on the yearly increase in sales. At the end of 2019, based on a 10% increase in sales, it expects that each executive will be granted 150 options and that the fair value of an option expected to vest is 15.75. Phoenix expects a turnover rate of 15% over the 3-year service period. Determine the compensation expense for 2019 for this plan.
Ultimate Company granted 100 share options to each of its 300 employees on January 2, 2018. The option plan allows the employees to purchase P100 par value ordinary share at P180 per share. The option pricing model used by the company indicated that the fair value of each option on January 2, 2020 was P30. The plan provides that the employees must be employed by the company for the next three years and that the options will expire at the end of 2021.At January 2, 2018, it was estimated that 20% of the employees will leave during the next three years. Actual and revised estimate of employees leaving the company during 2018, 2019 and 2020 are as follows:2018 – 10 employees left; revised estimate is 10% of the remaining options2019 – 15 employees left; revised estimate is 12% of the remaining options2020 – 12 employees left During 2021, 150 of the employees exercised their options while the remaining employees allowed their options to lapse.How much is the compensation expense in 2019?
On January 1, 2020, XYZ Co. granted options to key executives to purchase 100,000 shares of the company's $10 par value Common Stock at an option price of $50 per share. The Black-Scholes option pricing model determines total compensation expense to be $750,000. The options become exercisable after a 2 year service period from the date of grant. Assume all options were exercised in 2022 on the following dates: April 16, 2022– 70,000 options were exercised when the market value per share was $63 September 4, 2022 – 30,000 options were exercised when the market value per share was $72 Prepare a journal entry for: a) January 1, 2020 b) December 31, 2020 c) December 31, 2021 d) April 16th, 2022 e) September 4, 2022
1.On January 1, 2019, a company granted 100,000 options to key executives. Each option allows the executive to purchase one share of the company's $14 par value common stock at a price of $44 per share. The options were exercisable within a 2-year period beginning January 1, 2022. On the grant date, a fair value option-pricing model determines total compensation to be $800,000. On January 1, 2022, 1,000 options were exercised. In the journal entry to record the exercise, how much should be recorded for Paid-in Capital in Excess of Par – common stock? 2.A company issued 13,000 shares of $22 par value common stock upon conversion of 24,000 shares of $34 par value preferred stock. The preferred stock was originally issued at $43 per share. The common stock is trading at $22 per share at the time of conversion. In the journal entry to record the conversion of the preferred stock, how much should we record for Paid-in Capital in Excess of Par - common stock?
On January 1, 2018, M Company granted 90,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2020, and expire on January 1, 2024. Each option can be exercised to acquire one share of $1 par common stock for $12. An option-pricing model estimates the fair value of the options to be $5 on the date of grant. If unexpected turnover in 2019 caused the company to estimate that 15% of the options would be forfeited, what amount should M recognize as compensation expense for 2019?
In order to retain certain key executives, Wildhorse Corporation granted them incentive stock options on December 31, 2024. A total of 152000 options were granted at an option price of $35 per share. Market prices of the stock were as follows: December 31, 2025 December 31, 2026 The options were granted as compensation for executives' services to be rendered over a two-year period beginning January 1, 2025. The Black-Scholes option-pricing model determined total compensation expense to be $1501000. $44 per share 49 per share What amount of compensation expense should Wildhorse recognize as a result of this plan for the year ended December 31, 2025 under the fair value method? O $750500 $1653000 $1501000 $2622950
On January 1, 2024, Donnelly Company granted 97,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2026, and expire on January 1, 2030. Each option can be exercised to acquire one share of $1 par common stock for $9. An option-pricing model estimates the fair value of the options to be $3 on the date of grant. What amount should Donnelly recognize as compensation expense for 2024? Note: Round your answer to the nearest dollar amount.
LCI Cable Company grants 1 million performance stock options to key executives at January 1, 2021. The options entitle executives to receive 1 million of LCI $1 par common shares, subject to the achievement of specific financial goals over the next four years. Attainment of these goals is considered probable initially and throughout the service period. The options have a current fair value of $12 per option.Required:1. Prepare the appropriate entry when the options are awarded on January 1, 2021.2. Prepare the appropriate entries on December 31 of each year 2021–2024.3. Suppose at the beginning of 2023, LCI decided it is not probable that the performance objectives will be met. Prepare the appropriate entries on December 31 of 2023 and 2024.
On January 1, 2021, Crane Company granted stock options to officers and key employees for the purchase of 18000 shares of the company's $1 par common stock at $18 per share as additional compensation for services to be rendered over the next three years. The options are exercisable during a five-year period beginning January 1,2024 by grantees still employed by Crane. The Black-Scholes option pricing model determines total compensation expense to be $180300. The market price of common stock was $24 per share at the date of grant. The journal entry to record the compensation expense related to these options for 2021 would include a credit to the Paid-in Capital-Stock Options account for O $0. O $36060. O $60100. O $32400.
Fortune Brands granted options on January 1, 2024, that allows the recipient to purchase 15.0 million of the company's $1 par common shares within the next eight years, but not before December 31, 2026 (the vesting date). The exercise price is the market price of the shares on the date of grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. Ignoring taxes, what is the effect on earnings in the year after the options are granted to executives? Note: Round your answer to 1 decimal place. Multiple Choice O $60.0 million $90.0 million $0 $20.0 million
In order to retain certain key executives, Sheridan Company granted them incentive stock options on December 31, 2020. 144000 options were granted at an option price of $35 per share. Market prices of the stock were as follows: December 31, 2021$44 per share December 31, 202249 per share The options were granted as compensation for executives’ services to be rendered over a two-year period beginning January 1, 2021. The Black-Scholes option pricing model determines total compensation expense to be $1508000. What amount of compensation expense should Sheridan recognize as a result of this plan for the year ended December 31, 2021 under the fair value method? A. $1508000 B. $2633000 C. $754000 D. $1658000
On January 1, 2024, Sherwood Company granted 97,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2026, and expire on January 1, 2030. Each option can be exercised to acquire one share of $1 par common stock for $8. An option-pricing model estimates the fair value of the options to be $3 on the date of grant. If unexpected turnover in 2025 caused the company to estimate that 15% of the options would be forfeited, what amount should Sherwood recognize as compensation expense for 2025?