On March 1, 2022, Jensen Corp. purchased a call option on shares of YTV stock. The contract was for 100 shares at a strike price of $120 per share, with an expiration date of May 31, 2022. The option contract premium was $30. On March 31, a market appraisal estimated the time value of the option to be $20. Jensen settled the option contract on May 10. Prices of YTV stock during the option period are provided below. March 1 March 31 May 10 Price of YTV stock: $120 $110 $115 At what amount would Jensen report as the value of the call option in its March 31, 2022 balance sheet? Call option account balance as off March 31 :
Q: Warren Co. purchased a put option on Echo common shares on January 7, 2020, for $360. The put option…
A: GIVEN : 7 Jan 2020 Purchases of put option $ 360 No of put option shares…
Q: On November 1, 2020, Ayayai Company adopted a stock-option plan that granted options to key…
A: Stock option is the right to buy a particular number of shares of the company, at a particular price…
Q: 10,000 ordinary shares of P10 par value. The options call for a price of P25 per share and are…
A: Compensatory share options are the shares given to the employee's or other with the option to buy at…
Q: On January 1,2020, V Co. issued 100 share options to each of its 15 executive officers. The options…
A: An employee stock option gives the right to employees to purchase a pre specified number of shares…
Q: On January 1, 2020, The Red Hot Company established a share option plan for its selected senior…
A:
Q: Under its executive stock option plan, National Corporation granted 10 million options on January 1,…
A:
Q: On January 1, 2020, Green Company had issued executive share options permitting executives to buy…
A: In case of share options, the company issues the options has to compute the total estimated…
Q: On January 2, 2020, Jones Company purchases a call option for $300 on Merchant common stock. The…
A: A ) Journal entry:
Q: Under its executive stock option plan, National Corporation granted 30 million options on January 1,…
A:
Q: On January 2, 2020, Ayayai Company purchases a call option for $310 on Merchant common stock. The…
A: Journal entries are recording of the transaction in the accounting journal in a chronological order.…
Q: On November 1, 2020, DaBaby Company adopted a stock-option plan that granted options to key…
A: Employees Stock Option: When a company grants an employee stock option (ESO), it is referring to a…
Q: On January 1, Year 1, Spaghetti Corp. granted 100 share options each to 500 employees, conditional…
A: S.NO Particulars YEAR 1 YYEAR 2 YEAR 3 1. Total No. of employees 500 500 500 2. Employees…
Q: On Jan. 1, 2020, Luna Company granted 60,000 share options to employees. The share options will vest…
A: The Compensation expense is calculated by multiplying the number of stock options granted by the…
Q: Cheyenne Corp.purchased a put option on Sunland common shares on July 7,2021, for $110. The put…
A: Journal entry is a process of recording the business transactions in the books of accounts for the…
Q: On January 1, 2021, Adams-Meneke Corporation granted 15 million incentive stock options to division…
A: 1.Compute total compensation as follows: Result: Therefore the total compensation is $360 million.…
Q: On January 1, 2018, Adams-Meneke Corporation granted 25 million incentive stock options to division…
A: 1) Total Compensation cost on January 1, 2018 = No. of Stock options*Fair Value of Option Total…
Q: On January 1, 2020, XYZ Co. granted options to key executives to purchase 100,000 shares of the…
A: Journal entry is a primary entry that records the financial transactions initially.
Q: Under its executive stock option plan, National Corporation granted 30 million options on January 1,…
A: Journal Entry is basically refers to the record of the debits and credits transaction entries in the…
Q: On July 1, 2019, Sunland Financial Corporation granted 50,000 options to key executives. Each option…
A: Date Account Titles and Explanation Debit Credit July 1, 2019 No Entry on grant date…
Q: On January 1, 2021, Trent Company granted Dick Williams, an employee, an option to buy 400 shares of…
A: Given, Total compensation expense=$5,400Service period=2years
Q: Under its executive stock option plan, National Corporation granted 12 million options on January 1,…
A: Stock options is a employee benefit offered to employee by his/her company. It is an option given to…
Q: On August 15, 2019, Outkast Co. invested idle cash by purchasing a call option on Counting Crows…
A: Journal entry:
Q: On February 10, 2021, A&A Company purchased a call option for $2,200. The call option gives A&A the…
A: Derivatives- Financial assets Financial instruments which valued based on underlying assets called…
Q: Palvinder Inc. has an employee share option plan (ESOP) for its senior executives. On January 1,…
A: Fair Value per Employee Stock Option = Total Fair Value of ESOPNumber of Options issued
Q: What is the compensation expense for 2020?
A: Solution:- Given, ABC Company granted the president compensatory share to buy shares on January 1,…
Q: Under its executive stock option plan, Western Corporation granted options on January1, 2021, that…
A: Stockholder's equity: Stockholder's equity is the amount inclusive of shares held and the retained…
Q: On January 1, 2016, Dan Corporation granted an employee an option to purchase 3,000 shares of Dan’s…
A: Employee stock option plans are plans that are made for employees and and rights are provided to the…
Q: Under its executive stock option plan, National Corporation granted 12 million options on January 1,…
A: Given information is: Number of options granted = 12 million options Fair value of option = $5 per…
Q: On January 1, 2021, Howmet Aerospace granted options that permit executives to purchase 34 million…
A: A stock is a financial instrument issued by a corporation to raise equity funds from the primary…
Q: On January 1, 2021, M Company granted 90,000 stock options to certain executives. The options are…
A: calculation of compensation income for 2022 are as follows
Q: Under its executive stock option plan, Mining Co. granted options on January 1, 2021, that permit…
A: The net worth is represented by the stockholder's equity. It also shows the amount that would be…
Q: Under its stock option plan, Ameri Corp. granted 3 million stock options to employees on January 1,…
A: A corporation granted 30,00,000 stock options to employees. The fair value of each option is $5. The…
Q: Compute the amount of compensation expense for 2022 and 2023. (Enter your answers in millions…
A: Compensation Expenses ($ in million) 2022 $25.2 2023 $26.6
Q: On January 1, 2020, Cherry Red Company issued 10,000 share options for the purchase of P 100 par…
A: No. of options = 10,000 Fair value of options = P 20 vesting period = 3 (31 December 2020 to 31…
Q: On January 1, 2019, Flounder Corporation granted 9,400 options to key executives. Each option allows…
A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…
Q: On April 1, 2020, Gamma Corp. purchases a call option for $ 500, which gives Gamma the right to buy…
A: Options contract provide option holder a right to enter into a transaction at a particular price for…
Q: On June 1, 2020, ABC Company granted share options to key employees for the purchase of 42,000 of…
A: Number of stock option = 42,000 Fair value of stock option = P10 Vesting period = 4 Years
Q: On January 1, 2021, Major Corp. granted its employees an option to purchase 5,000 of Major's common…
A: Employee Stock Option Plan: It is an employee benefit plan to participate in the Employee Stock…
Q: On August 1, 2020, Cullumber Ltd. purchased a call option from DDR Investments Corporation. The…
A: Journal entries refer to the recording/ classifying the business transactions into books of accounts…
Q: Ivanhoe Corp. purchased a put option on Mykia common shares on July 7, 2020, for $468. The put…
A: Put Option:-It is a financial derivative instrument that gives the right to the holder to sell the…
Q: At January 1, 2021, the company had issued 40,000 executive stock options permitting executives to…
A: As per IAS 102, Share based payments Compensation expense will be recognised each year, over vesting…
Q: Johnstone Co. purchased a put option on Ewing common shares on July 7, 2020, for $240. The put…
A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…
Q: On Jan. 1, 2010, EASY Company granted ABC, its executive, compensatory share options to buy 10,000…
A: Share premium is the difference between the par value and the issue price of the share. It is also…
Q: On January 1, Year 1, Spaghetti Corp. granted 100 share options each to 500 employees, conditional…
A: Total Compensation Expense booked upto Year 2 [(500 - 30 - 30) * 100 share option * P30 * 2 /3]…
Q: On November 1, 2017, Marigold Company adopted a stock-option plan that granted options to key…
A: The question is based on the concept of Journal entries
Q: Newmont Corp grants stock options to its top executives. On January 1, 2021, 24 million options were…
A: Equity shares are those shares which do not have preferential right on dividend and repayment of…
Q: Yates Co. Purchased a put option on Dixon common shares on January 7, 2014, for $270. The put option…
A: Journal entry is a record of financial transactions in the books of accounts of a business by an…
Q: On October 15, 2020, the board of directors of Ensor Materials Corporation approved a share option…
A:
On March 1, 2022, Jensen Corp. purchased a call option on shares of YTV stock. The contract was for 100 shares at a strike price of $120 per share, with an expiration date of May 31, 2022. The option contract premium was $30. On March 31, a market appraisal estimated the time value of the option to be $20.
Jensen settled the option contract on May 10. Prices of YTV stock during the option period are provided below.
March 1 | March 31 | May 10 | |
Price of YTV stock: | $120 | $110 | $115 |
At what amount would Jensen report as the value of the call option in its March 31, 2022 balance sheet?
Call option account balance as off March 31 :
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- 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 1 of the current year, a call option was purchased by Beats Co. for $40 , which allows Beats Co. to purchase 50 shares of Bieber Inc. stock at a strike price of $25 per share through December 31 of the following year. On January 1, the fair value of the stock is $25 per share. On June 30, the fair value of each share of Bieber Inc. stock is $28 per share, and the fair value of the option is $190. Assuming that Beats Co. settles the call option on June 30, what is the gain or loss (if any) recorded on June 30? Assume that the call option was adjusted to fair value before settlement.● Note: Do not use a negative sign with your answer.● Note: If no gain or loss is recorded, select "N/A" and leave the answer blank (zero)On January 1, 2020, Jade Company granted 100 share options each to 500 employees, conditional upon the employees’ remaining in the entity’s employ during the vesting period. The share options vest at the end of a three-year period. On grant date, each share option has a fair value of P30. The par value per share is P100 and the option price is P120. On December 31, 2021, 30 employees have left and it is expected that on the basis of weighted average probability, a further 30 employees will leave before the of the three-year period. On December 31, 2022, only 20 employees actually left and all of the share options are exercised on such date. How much is the compensation expense that should be recognized for 2022?A . 500,000 B. 880,000 C. 380,000 D. 470,000
- On January 1, 2022, Rosewood Corp. purchased a put option on shares of ICM stock. Terms of the contract were as follows: Number of shares: 100 Strike price: $200 per share Expiration date: May 31, 2022 Total cost of the option contract: $80 Seller of the option contract: First Investment Bank On January 1, 2022, ICM stock was trading at $200 per share.The following additional information is known: On March 31, 2022, the price of ICM stock was $220 per share. A market appraisal indicated that the time value of the option contract was $60. On May 10, 2022, the price of ICM stock was $185 per share. A market appraisal indicated that the time value of the option contract was $50. On this date, Rosewood settled the option contract. What is the dollar value of put option that Rosewood Corp. would have included in its March 2022 quarterly financial statements?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 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
- Johnstone Co. purchased a put option on Ewing common shares on July 7, 2020, for $240. The put option is for 200 shares, and the strike price is $70. (The market price of a share of Ewing stock on that date is $70.) The option expires on January 31, 2021. The following data are available with respect to the put option. Date Market Price of Ewing Shares Time Value of Put Option September 30, 2020 $77 per share $125 December 31, 2020 75 per share 50 January 31, 2021 78 per share 0 Instructions Prepare the journal entries for Johnstone Co. for the following dates. a. July 7, 2020—Investment in put option on Ewing shares. b. September 30, 2020—Johnstone prepares financial statements. c. December 31, 2020—Johnstone prepares financial statements. d. January 31, 2021—Put option expires.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 August 15, 2019, Outkast Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $360. The notional value of the call option is 400 shares, and the option price is $40. The option expires on January 31, 2020. The following data are available with respect to the call option. Date Market Price of Counting Crows Shares Time Value of Call Option September 30, 2019 $48 per share $180 December 31, 2019 46 per share 65 January 15, 2020 47 per share 30 Instructions Prepare the journal entries for Outkast for the following dates. a. Investment in call option on Counting Crows shares on August 15, 2019. b. September 30, 2019—Outkast prepares financial statements. c. December 31, 2019—Outkast prepares financial statements. d. January 15, 2020—Outkast settles the call option on the Counting Crows shares.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 sharesOn January 1, 2020, Waldorf Corporation granted 40,000 options to key executives. Each option allows the executive to purchase one share of Waldorf’s common shares at a price of $30 per share. The options were exercisable within a two–year period beginning January 1, 2022, if the grantee was still employed by the company at the time of the exercise. On the grant date, Waldorf’s shares were trading at $25 per share, and a fair value options pricing model determined total compensation to be $1,680,000. Management has assumed that there will be no forfeitures because they do not expect any of the key executives to leave. On May 1, 2022, 12,000 options were exercised when the market price of Waldorf’s shares was $34 per share. The remaining options lapsed in 2023 because executives decided not to exercise them. Management was indeed correct in their assumption regarding forfeitures in that all executives remained with the company. Assume that Waldorf follows IFRS. Prepare the…