c company, adopted a stock option plan on November 30, Y4, designated 120,000 common shares as available for the granting of options to officers of the corporation at an exercise price of $9.20 a share. The market value was $11.25 a share on November 30, Y4. On January 2, Y5, options to purchase 55,000 shares were granted to President Riley. These were to be earned equally over the subsequent two years. The shares' market value was $14.00 a share on January 2, Y5. The options were exercisable for a period of one year following the years in which the services were rendered. On January 2, Y5, the value of the options was estimated at $653,000.
c company, adopted a stock option plan on November 30, Y4, designated 120,000 common shares as available for the granting of options to officers of the corporation at an exercise price of $9.20 a share. The market value was $11.25 a share on November 30, Y4. On January 2, Y5, options to purchase 55,000 shares were granted to President Riley. These were to be earned equally over the subsequent two years. The shares' market value was $14.00 a share on January 2, Y5. The options were exercisable for a period of one year following the years in which the services were rendered. On January 2, Y5, the value of the options was estimated at $653,000.
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 5MC
Related questions
Question
| Aylmer Corp., a public company, adopted a stock option plan on November 30, Y4, designated 120,000 | |||
| common shares as available for the granting of options to officers of the corporation at an exercise price of $9.20 a share. | |||
| The market value was $11.25 a share on November 30, Y4. | |||
| On January 2, Y5, options to purchase 55,000 shares were granted to President Riley. | |||
| These were to be earned equally over the subsequent two years. The shares' market value was $14.00 a share on January 2, Y5. | |||
| The options were exercisable for a period of one year following the years in which the services were rendered. | |||
| On January 2, Y5, the value of the options was estimated at $653,000. | |||
| On June 8, Y7, the president exercised 42,000 of the options. The shares' market value was $9.60 a share on December 31, Y7 | |||
| when the rest of the options expired. | |||
| REQUIRED: | |||
| a. Prepare the necessary |
|||
| b. Prepare the necessary journal entry in Y5 and Y6 when the stock options were earned | |||
| c. Prepare the necessary journal entry in Y7 when the stock options were exercised | |||
| d. Prepare the necessary journal entry in Y7 when the rest of the stock options expired |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College