On April 1, 2023, Gamma Corp. purchases a call option for $500, which shares of Delta Inc. for $30 each until December 1, 2023. Delta Inc. sha June 30, 2023, the options are trading at $4,800 and the shares at $32 options expire with no value. The time value of the option at April 1, 2023 is $0. $500. $4,800. $30,000.
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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 April 1, 2023, Gamma Corp. purchases a call option for $500, which gives Gamma the right to buy 1,000 shares of Delta Inc. for $30 each until December 1, 2023. Delta Inc. shares are currently trading for $30. At June 30, 2023, the options are trading at $4,800 and the shares at $32 each. At December 1, 2023, the options expire with no value. The entry to record the purchase of the call option is: a. Derivatives-Financial Assets. Cash. 500 500 b. Cash. 500 Derivatives Financial Assets. 500 c. FV-NI Investments. Cash... 500 500 d. No entry required. Please dont provide solution image based thanxOn July 1, 2020, Paulina, Inc. granted share options to executives, which options allow them to purchase 20,000 ordinary shares at 25 per share. The options will vest provided that the executives will be employed in the company for the next two years. The options can be exercised for a one-year period starting July 1, 2022. By end of 2020, the market price of Paulina’s ordinary share as P33 per share. The fair value of the options cannot be reliably determined. All executives are expected to remain in the company for the whole vesting period. How much should Paulina charge to compensation expense for the year ended December 31, 2020? a. P0 b. P40,000 c. P80,000 d. P160,000
- On January 1, 2021, Howmet Aerospace granted options that permit executives to purchase 34 million of the company's $1 par common shares within the next eight years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $19 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. No forfeitures are anticipated. The options are exercised on April 2, 2024, when the market price is $22 per share. By what amount will Howmet's shareholder's equity be increased when the options are exercised? Multiple Choice $170 million. $782 million. $816 million. $646 million.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?On January 2, 2020, Jones Company purchases a call option for $300 on Merchant common stock. The call option gives Jones the option to buy 1,000 shares of Merchant at a strike price of $50 per share. The market price of a Merchant share is $50 on January 2, 2020 (the intrinsic value is therefore $0). On March 31, 2020, the market price for Merchant stock is $53 per share, and the time value of the option is $200. Instructions a. Prepare the journal entry to record the purchase of the call option on January 2, 2020. b. Prepare the journal entry(ies) to recognize the change in the fair value of the call option as of March 31, 2020. c. What was the effect on net income of entering into the derivative transaction for the period January 2 to March 31, 2020?
- On January 2, 2020, Ayayai Company purchases a call option for $310 on Merchant common stock. The call option gives Ayayai the option to buy 1,090 shares of Merchant at a strike price of $49 per share. The market price of a Merchant share is $49 on January 2, 2020 (the intrinsic value is therefore $0). On March 31, 2020, the market price for Merchant stock is $53 per share, and the time value of the option is $200. Prepare the journal entry to record the purchase of the call option on January 2, 2020. (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.) Date Account Titles and Explanation Debit Credit Jan. 2, 2020 enter an account title to record the transaction on January 2, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction on January 2, 2020 enter a debit…On January 1, 2021, EG Corporation granted 30 million options under its executive stock option plan that permit executives to purchase 30 million of the company’s $1 par common shares within the next eight years, but not before December 31, 2025 (the vesting date). The exercise price is the market price of the shares on the date of grant, $30 per share. The fair value of the options, estimated by an appropriate option pricing model, is $2 per option. No forfeitures are anticipated. 1. Ignoring taxes, what is the total compensation cost EG Corporation will recognize as a result of the stock options?2. Ignoring taxes, what is the effect on EG's earnings in the year after the options are granted to executives?On January 1, 2021, Major Corp. granted its employees an option to purchase 5,000 of Major's common shares at $50 per share. The Black-Scholes option pricing model determined total compensation expense to be $225,000. The option is exercisable on December 31, 2022, after employees complete two years of service. The market price of Major's shares on December 31, 2021 was $52. For December 31, 2021, Major should recognize compensation expense of: Question 10 options: $10,000 $112,500 $250,000 $225,000 On December 1, 2021, Parfait Ltd. borrowed $180,000 from a local bank by signing a four-month, 5% interest bearing note. All payments will be made at the note's maturity date. Assuming Parfait has a December 31 year-end, the adjusting journal entry on December 31 will include a: Question 1 options: debit to Interest payable of $750. credit to Notes Payable of $750…
- Under its executive stock option plan, Boston Corporation granted options on January 1, 2021, that permit executives to purchase 15 million of the company's $1 par common shares within the next eight years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $18 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures were anticipated; however, unexpected turnover during 2022 caused the forfeiture of 5% of the stock options. Ignoring taxes, what is the effect on earnings in 2022? Multiple Choice -$18.5 million. -$18 million. -$19 million. -$20 million.Under its executive stock option plan, Sorensen Corporation granted options on January 1, 2024, that permit executives to purchase 31 million of the company's $1 par common shares within the next seven 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, $19 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. The options expired in 2030 without being exercised. By what amount will Sorensen's shareholders' equity be increased as a result of having granted the options?Ivanhoe Corp. purchased a put option on Mykia common shares on July 7, 2020, for $468. The put option is for 350 shares, and the strike price is $50. The option expires on January 31, 2021. The following data are available with respect to the put option: Fair Value Market Price Date of Option of Mykia Shares Sept. 30, 2020 $230 $58 per share Dec. 31, 2020 $97 $60 per share Jan. 31, 2021 $0 $64 per share Prepare the journal entries for Miller Co. for the following dates. (a) July 7, 2020—Investment in call option on Wade shares. (b) September 30, 2020—Miller prepares financial statements. (c) December 31, 2020—Miller prepares financial statements. (d) January 4, 2021—Miller settles the call option on the Wade shares
