In order to boost the sales of Leila & Co., the board of directors approved a share appreciation plan for its Chief Operating Officer. The plan was granted on January 1, 2020 and is exercisable for one year beginning January 1, 2022, provided that the COO is still employed at the date of its exercise. The plan compensates the COO for a cash payment equal to the excess of Leila’s share price over the pre-determined price of P50. Equivalent shares to be granted will be dependent upon the level of annual sales of the company on the date of exercise, as follows: · 100 million to 200 million sales: 10,000 shares · Over 200 million sales: 12,000 shares Actual sales achieved by Leila, and the share price of the company’s shares at the end of each year are below (SEE PICTURE BELOW): How much should the company recognized as compensation expense for 2020 and 2021, respectively? a. 135,000 ; 165,000 b. 270,000 ; 30,000 c. 385,000 ; 515,000 d. 770,000 ; 900,000
In order to boost the sales of Leila & Co., the board of directors approved a share appreciation plan for its Chief Operating Officer. The plan was granted on January 1, 2020 and is exercisable for one year beginning January 1, 2022, provided that the COO is still employed at the date of its exercise. The plan compensates the COO for a cash payment equal to the excess of Leila’s share price over the pre-determined price of P50. Equivalent shares to be granted will be dependent upon the level of annual sales of the company on the date of exercise, as follows: · 100 million to 200 million sales: 10,000 shares · Over 200 million sales: 12,000 shares Actual sales achieved by Leila, and the share price of the company’s shares at the end of each year are below (SEE PICTURE BELOW): How much should the company recognized as compensation expense for 2020 and 2021, respectively? a. 135,000 ; 165,000 b. 270,000 ; 30,000 c. 385,000 ; 515,000 d. 770,000 ; 900,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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In order to boost the sales of Leila & Co., the board of directors approved a share appreciation plan for its Chief Operating Officer. The plan was granted on January 1, 2020 and is exercisable for one year beginning January 1, 2022, provided that the COO is still employed at the date of its exercise. The plan compensates the COO for a cash payment equal to the excess of Leila’s share price over the pre-determined price of P50. Equivalent shares to be granted will be dependent upon the level of annual sales of the company on the date of exercise, as follows:
· 100 million to 200 million sales: 10,000 shares
· Over 200 million sales: 12,000 shares
Actual sales achieved by Leila, and the share price of the company’s shares at the end of each year are below (SEE PICTURE BELOW):
How much should the company recognized as compensation expense for 2020 and 2021, respectively?
· 100 million to 200 million sales: 10,000 shares
· Over 200 million sales: 12,000 shares
Actual sales achieved by Leila, and the share price of the company’s shares at the end of each year are below (SEE PICTURE BELOW):
How much should the company recognized as compensation expense for 2020 and 2021, respectively?
a. 135,000 ; 165,000
b. 270,000 ; 30,000
c. 385,000 ; 515,000
d. 770,000 ; 900,000
Transcribed Image Text:Year
Sales
Share Price
120 million
250 million
2020
P77
2021
P75
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