2 On November 1, 2022, Crane Corp. adopted a stock option plan that granted options to key executives to purchase 49,800 commonshares. The options were granted on January 2, 2023, and were exercisable two years after the date of grant if the grantee was still acompany employee; the options expire six years from the date of grant. The option price was set at $37, and total compensationexpense was estimated to be $522,000. Note that the calculation did not take forfeitures into account.On April 1, 2024, 3,900 options were terminated when some employees resigned from the company. The fair value of the shares atthat date was $25. All of the remaining options were exercised during the year 2025: 34,900 on January 3 when the fair value was $47,and 11,000 on May 1 when the fair value was $53 a share. Assume that the entity follows ASPE and has chosen not to reflectforfeitures in its upfront estimate of compensation expense.(a)Prepare journal entries relating to the stock option plan for the years 2023, 2024, and 2025. Assume that the employees performservices equally in 2023 and 2024, and that the year end is December 31. (Credit account titles are automatically indented when theamount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry"for the account titles and enter O for the amounts. List all debit entries before credit entries. Round answers to O decimal places, e.g. 5,275. Donot round intermediate calculations.)

Employees Stock Option Plan -Employee stock ownership plans, often known as employee stock option…

November 1, 2022, Crane Corp. adopted a stock option plan that granted options to key executives to purchase 49 ares. The options were granted on January 2, 2023, and were exercisable two years after the date of grant if the gra mpany employee; the options expire six years from the date of grant. The option price was set at $37, and total com pense was estimated to be $522,000. Note that the calculation did not take forfeitures into account. April 1, 2024, 3,900 options were terminated when some employees resigned from the company. The fair value of at date was $25. All of the remaining options were exercised during the year 2025: 34,900 on January 3 when the fa d 11,000 on May 1 when the fair value was $53 a share. Assume that the entity follows ASPE and has chosen not to feitures in its upfront estimate of compensation expense.

November 1, 2022, Crane Corp. adopted a stock option plan that granted options to key executives to purchase 49 ares. The options were granted on January 2, 2023, and were exercisable two years after the date of grant if the gra mpany employee; the options expire six years from the date of grant. The option price was set at $37, and total com pense was estimated to be $522,000. Note that the calculation did not take forfeitures into account. April 1, 2024, 3,900 options were terminated when some employees resigned from the company. The fair value of at date was $25. All of the remaining options were exercised during the year 2025: 34,900 on January 3 when the fa d 11,000 on May 1 when the fair value was $53 a share. Assume that the entity follows ASPE and has chosen not to feitures in its upfront estimate of compensation expense.

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 7RE: On January 1, 2019, Phoenix Corporation adopts a performance-based share option plan for 25...

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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.
On 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, 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
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.
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.
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 November 1, 2020, Novak Company adopted a stock-option plan that granted options to key executives to purchase 25,500 shares of the company's $9 par value common stock. The options were granted on January 2, 2021, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $50, and the fair value option-pricing model determines the total compensation expense to be $382,500. All of the options were exercised during the year 2023: 17,000 on January 3 when the market price was $65, and 8,500 on May 1 when the market price was $76 a share. Prepare journal entries relating to the stock option plan for the years 2021, 2022, and 2023. Assume that the employee performs services equally in 2022 and 2023. (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…
On November 1, 2025, Kingbird Company adopted a stock-option plan that granted options to key executives to purchase 25,500 shares of the company's 59 par value common stock. The options were granted on January 2, 2026, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $50, and the fair value option-pricing model determines the total compensation expense to be $382.500. All of the options were exercised during the year 2028: 17,000 on January 3 when the market price was $65, and 8,500 on May 1 when the market price was $76 a share. Prepare journal entries relating to the stock option plan for the years 2026, 2027, and 2028. Assume that the employee performs services equally in 2026 and 2027. (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…
On November 1, 2020, Sandhill Company adopted a stock option plan that granted options to key executives to purchase 30,000 shares of the company's $10 par value common stock. The options were granted on January 2, 2021, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $30, and the fair value option-pricing model determines the total compersation expense to be $450,000. All of the options were exercised during the year 2023: 20,000 on January 3 when the market price was $69, and 10,000 on May 1 when the market price was $78 a share. Prepare journal entries relating to the stock option plan for the years 2021, 2022, and 2023. Assume that the employee performs services equally in 2022 and 2023. (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…
On January 1, 2025, Ivanhoe Company granted stock options to officers and key employees for the purchase of 19400 shares of the company's $1 par value 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, 2028 by grantees still employed by Ivanhoe. The Black-Scholes option-pricing model determined total compensation expense to be $188700. The market price of common stock was $26 per share at the date of grant. The journal entry to record the compensation expense related to these options for 2025 would include a credit to the Paid-in Capital- Stock Options account for $62900. O $37740. O $38800. O $0.
Date May 1, 2028 Account Titles and Explanation Debit Credit
On November 1, 2020, Sweet Company adopted a stock-option plan that granted options to key executives to purchase 31,800 shares of the company’s $9 par value common stock. The options were granted on January 2, 2021, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $477,000.All of the options were exercised during the year 2023: 21,200 on January 3 when the market price was $68, and 10,600 on May 1 when the market price was $78 a share.Prepare journal entries relating to the stock option plan for the years 2021, 2022, and 2023. Assume that the employee performs services equally in 2022 and 2023. (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…