On January 1, 2020, Bloody Red Company issued to its chief executive officer share options for the purchase of the company's ordinary share at a strike price of P 50. The options are exercisable, beginning January 1,2023 and expire on December 31,2024. The options may be exercised only if the officer is still in the employ of the company at the date of the exercise. The share options are valued at P 30 per share on January 1,2020 based on the option-pricing model used by the company. The number of share options granted will be based on the following sales level for the year 2022: Level of Sales Number of Options Below P 3,000,000 Nil P 30,0000 – P 50,000,000 10,000 shares Over P 50,000,000- P 70,000,000 15,000 shares Over P 70,000,000 18,000 shares Estimates of the sales for 2022 were as follows: 2022 Estimated sales Estimate made at January 1, 2020 P 35,000,000 December 31,2020 52,000,000 December 31,2021 70,000,000 Actual sales for 2022 were P 75,000,000. REQUIRED: Prepare all entries in 2020 through 2022 related to the above data.

On January 1, 2020, Bloody Red Company issued to its chief executive officer share options for the purchase of the company's ordinary share at a strike price of P 50. The options are exercisable, beginning January 1,2023 and expire on December 31,2024. The options may be exercised only if the officer is still in the employ of the company at the date of the exercise. The share options are valued at P 30 per share on January 1,2020 based on the option-pricing model used by the company. The number of share options granted will be based on the following sales level for the year 2022: Level of Sales Number of Options Below P 3,000,000 Nil P 30,0000 – P 50,000,000 10,000 shares Over P 50,000,000- P 70,000,000 15,000 shares Over P 70,000,000 18,000 shares Estimates of the sales for 2022 were as follows: 2022 Estimated sales Estimate made at January 1, 2020 P 35,000,000 December 31,2020 52,000,000 December 31,2021 70,000,000 Actual sales for 2022 were P 75,000,000. REQUIRED: Prepare all entries in 2020 through 2022 related to the above data.

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 8RE: On January 2, 2019, Brust Corporation grants its new CFO 2,000 restricted share units. Each of the...

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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 January 2, 2019, Brust Corporation grants its new CFO 2,000 restricted share units. Each of the time-vested restricted share units entitles the CFO to receive one share of Brust common stock if she remains an employee of the company for 4 years. On January 2, 2019, shares of Brusts 1 par value common are trading at 29.50 per share. The company estimates that the CFO will complete all 4 years of required service with the company. Prepare the journal that Brust should make each year to account for the restricted share units.
Convertible Preferred Stock On January 2, 2019, Bray Corporation issues 900 shares of 100 par convertible preferred stock for 117 per share. On January 7, 2020, all the preferred shareholders convert their shares to common stock. Required: 1. Prepare the January 2, 2019, journal entry to record the issuance of the preferred stock. 2. Prepare the January 7, 2020, journal entry to record the conversion, assuming the preferred stock contract states that: a. each share of preferred stock is convertible into 7 shares of 10 par common stock b. each share of preferred stock is convertible into 12 shares of 10 par common stock
Restricted Share Units On January 2, 2019, Dekker Company grants each of its 15 new employees 200 restricted share units. Each of the time-vested restricted share units entitles the employee to receive one share of Dekker common stock if they remain an employee of the company for 2 years. On January 2, 2019, shares of Dekkers 2 par value common are trading at 52 per share. Dekker estimates that 12 of the 15 employees will complete 2 years of service with the company. At the end of 2020, Dekker reported that four employees left the company before completing the service period. Required: 1. Prepare a schedule of Dekker s computations for its restricted share unit plan for 2019 and 2020 (round all computations to the nearest dollar). 2. Prepare all journal entries for the restricted share unit plan for 2019 and 2020.
On 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 1,2020 , Red Day Company granted 80 share options to each of its 400 employees for the purchase of P 100 par ordinary share at P 140 per share. The fair value of each option on this date was P 22. The employees are required to be in the employ of the company at least until the options vested. The share options will vest as follows: End of 2020, if earnings in 2020 increased of 15% End of 2021, if average annual earnings during 2020 would increase by at least 13%. During 2021, reported earnings increased by 12%. The company reported an increase in 2020 earnings by 13%. At December 31,2020, it was expected that earnings during 2020 would increase by at least 13%. During 2021, reported earnings increased by 12%. No employees left the company during the two year period 2020-2021. All options were exercised during 2022. REQUIRED: a.) All entries during 2020 through 2022. b.) Assume that the reported earnings in 2020 increased by 15%. How much compensation expense would be…
On January 1, 2020, Marie Company granted 200 share options to 300 employees, conditional upon the employees remaining in the entity's employ during the vesting period. The share options will vest over a three- year period. The fair value of each share optiom is P50. By the end of 2020 employees have left and based on a weighted average probability, a further 10 employees will leave during the vesting period. By the end of 2021, only 8 employees have left and a further 32 employees will leave during 2022. By the end of 2022, only 25 employees left the entity. Required: Compute the compensation expense for 2020, 2021 and 2022 as a result of the share options.
On January 1, 2020, COLOR Company granted 250 share options to 300 employees, conditional upon the employees remaining in the entity's employ during the vesting period. The share options will vest over a three-year period. The fair value of each share option is P50. By the end of 2020, 25 employees have left and based on a weighted average probability, a further 20 employees will leave during the vesting period. By the end of 2021, only 10 employees have left and a further 28 employees will leave during 2022. By the end of 2022, only 30 employees left the entity. All share options are exercised at December 31, 2022. Color's par value per share is 75 and the option price is 100. Compute for the compensation expense for 2020, 2021 and 2022
On January 1, 2019, an entity granted 100 share options each to 500 employees, conditional upon the employee'sremaining in the entity's employ during the vesting period. The share options vest at the end of a three-year period. Ongrant date, each share option has a fair value of P30. The par value per share is P100 and the option price is P120. OnDecember 31, 2020, 30 employees have left and it is expected that on the basis of a weighted average probability, afurther 30 employees will leave before the end of the three-year period. On December 31, 2021, only 20 employeesactually left and all of the share options are exercised on such date. 26. What amount was credited to share premium when the options were exercised on December 31, 2021?a. 2,250,000 c. 900,000b. 2,350,000 d. 0 PROVIDE COMPUTATION
On January 1, 2020, the entity granted share options of 100,000 ordinary shares (with par value of P30 per share) at an option price of P38 per share as compensation to its officers for services to be rendered in the next three years. These options are exercisable within two years from January 1, 2023, provided that the officers remain in the employ of the company. The fair value of the share options on date of grant is P12, and the market price of the share on grant date is P47 per share. During 2023, all share options are exercised. How much should be recognized as share premium upon exercise of the share options in 2023? A. P 2,000,000 B. P 1,200,000 C. P 800,000 D. Zero E. Option 2
On January 1, 2020, the entity granted share options of 100,000 ordinary shares (with par value of P30 per share) at an option price of P38 per share as compensation to its officers for services to be rendered in the next three years. These options are exercisable within two years from January 1, 2023, provided that the officers remain in the employ of the company. The fair value of the share options on date of grant is P12, and the market price of the share on grant date is P47 per share. During 2023, all share options are exercised. How much should be recognized as share premium upon exercise of the share options in 2023? P 2,000,000 P 1,200,000 P 800,000 Zero Option 2
On January 1, 2020, the entity granted share options of 100,000 ordinary shares (with par value of P30 per share) at an option price of P38 per share as compensation to its officers for services to be rendered in the next three years. These options are exercisable within two years from January 1, 2023, provided that the officers remain in the employ of the company. The fair value of the share options on date of grant is P12, and the market price of the share on grant date is P47 per share. During 2023, all share options are exercised. How much should be recognized as share premium upon exercise of the share options in 2023?