Required: a. The stock options are incentive stock options. b. The stock options are nonqualified stock options. Complete the following table. (For all requirements, leave no answer blank. Enter zero if applicable and select "N/A" if no effect.) Under ASC 718 a. Incentive Stock Options b. Nonqualified Stock Options (temporary differences) b. Nonqualified Stock Options (permanent differences) Book-Tax differences $ Year 1 Favorable/ Unfavorable Unfavorable Unfavorable 0 N/A Temporary/ Book-Tax Permanent differences Permanent Temporary N/A $ Year 2 Favorable/ Unfavorable Unfavorable Unfavorable 0 N/A Temporary/ Permanent Permanent Temporary N/A Book-Tax differences $ Year 3 Favorable/ Unfavorable 0 N/A Unfavorable Favorable Temporary/ Permanent N/A Permanent Temporary

Required: a. The stock options are incentive stock options. b. The stock options are nonqualified stock options. Complete the following table. (For all requirements, leave no answer blank. Enter zero if applicable and select "N/A" if no effect.) Under ASC 718 a. Incentive Stock Options b. Nonqualified Stock Options (temporary differences) b. Nonqualified Stock Options (permanent differences) Book-Tax differences $ Year 1 Favorable/ Unfavorable Unfavorable Unfavorable 0 N/A Temporary/ Book-Tax Permanent differences Permanent Temporary N/A $ Year 2 Favorable/ Unfavorable Unfavorable Unfavorable 0 N/A Temporary/ Permanent Permanent Temporary N/A Book-Tax differences $ Year 3 Favorable/ Unfavorable 0 N/A Unfavorable Favorable Temporary/ Permanent N/A Permanent Temporary

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 1P: Subscriptions On August 3, 2019, the date of incorporation, Quinn Company accepts separate...

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15. ABC Corporation (a public company) establishes an employee stock option plan on January 1, year 1. The plan allows its employees to acquire 10,000 shares of its P1 par value common stock at P52 per share, when the market price is also P52. The options may not be exercised until five years from the grant date. The grant-date fair value of an option with similar terms and conditions is P8.62. When the option is exercised after the 5-year period, the net increase in shareholders’ equity is?
7. ABC Corporation (a public company) establishes an employee stock option plan on January 1, year 1. The plan allows its employees to acquire 10,000 shares of its P1 par value common stock at P52 per share, when the market price is also P52. The options may not be exercised until five years from the grant date. The grant-date fair value of an option with similar terms and conditions is P8.62. When the option is exercised after the 5-year period, the resulting share premium is?
2. ABC Corporation (a public company) establishes an employee stock option plan on January 1, year 1. The plan allows its employees to acquire 10,000 shares of its P1 par value common stock at P52 per share, when the market price is also P52. The options may not be exercised until five years from the grant date. The grant-date fair value of an option with similar terms and conditions is P8.62. Compensation expense at the end of year 1 is Answer:
Problem 16-03 Novak Company adopted a stock-option plan on November 30, 2019, that provided that 74,400 shares of $5 par value stock be designated as available for the granting of options to officers of the corporation at a price of $10 a share. The market price was $12 a share on November 30, 2020.On January 2, 2020, options to purchase 29,800 shares were granted to president Tom Winter—14,200 for services to be rendered in 2020 and 15,600 for services to be rendered in 2021. Also on that date, options to purchase 16,600 shares were granted to vice president Michelle Bennett—8,300 for services to be rendered in 2020 and 8,300 for services to be rendered in 2021. The market price of the stock was $15 a share on January 2, 2020. The options were exercisable for a period of one year following the year in which the services were rendered. The fair value of the options on the grant date was $4 per option.In 2021, neither the president nor the vice president exercised their options because…
Exercise 16-04 On January 1, 2019, when its $30 par value common stock was selling for $80 per share, Wildhorse Corp. issued $12,100,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporation’s common stock. The debentures were issued for $13,068,000. The present value of the bond payments at the time of issuance was $10,285,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2020, the corporation’s $30 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2021, when the corporation’s $15 par value common stock was selling for $135 per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums.(a)…
Company A issues 15,000 8% noncumulative, retractable preferred shares for $100 per share. The shares are retractable by the holder on or after Sept 1 of the current year, and redeemable at the option of the company on or after Sept 2nd of the current year. Commencing on September 2 the company is required to purchase 10% annually of the total outstanding preferred shares at $105 per share. How would i make the journal entries?
15 On August 1, 2021, Comical Company issued rights to stockholders to subscribe to additional share of its common stock. A stockholder can buy one new share for every 5 rights plus P25 cash. The rights will expire on October 1, 2021. On July 31, 2021, the market price of a share with the right attached was P50, while the market price of the right alone was P5. Comical’s equity on July 31, 2021, comprised of the following: Ordinary Shares, P10 par P4,000,000 Subscribed ordinary shares 1,000,000 Share premium 600,000 Retained earnings 200,000 Treasury shares, 80,000 shares 1,750,000 What is the effect on the…
Problem 1 (Adapted)On January 1, 2017, Gliezel company issued options to key employees to purchase 20,000 ordinary shares of P100 par value at P125 per share. On such date, the market value of ordinary share is P150 per share. The fair value of each share option is P30. These options are exercisable starting January 1, 2019 and expire one year after. Options covering 17,500 shares are exercised on January 15, 2019 and the remaining options expired. a. Compute compensation expense for the year 2017, 2018 and 2019.b. Prepare journal entries to record the compensation each year as well as the exercise and expiration of the share options
Knowledge Check 01 At January 1, Year 1, AMC Company grants 10,000 options that permit key executives to acquire 10,000 of the company’s $1 par common shares within the next five years, but not before December 31, Year 3 (the vesting date). The exercise price is the market price of the shares on the date of grant, $20 per share. The fair value of the options is $4 per option. Eighty percent of the options (or 8,000) are exercised on January 5, Year 4 when the market price is $30 per share. The remaining 20% of the options expire as unexercised when the market price is $18 per share. Prepare the appropriate journal entry for the expiration of the unexercised options.
QUESTION 7 At December 31, 2019, Bixby Corporation had 30,000 shares outstanding of $10 par value common stock. The shares were originally issued for $26 per share. On January 1, 2020, Bixby split its common stock 4 for 1 with a corresponding reduction in the stock’s par value. The market price of the stock just before the split was $60 per share. After the split, the balance of the common stock account is: A. $ 900,000 B. $ 780,000 C. $1,800,000 D. $ 300,000
Case 2On January 1, 2018, Olaf company granted share options to key employees to supplement their compensation. The options given were 200,000 ordinary shares of P10 par value at an option price of P15 per share. The market price of this share on January 1, 2018 was P20. The fair value of each share option on January 1, 2018 is P8. The options were exercisable beginning January 1, 2018 and expire on December 31, 2020. On December 31, 2018, all share options were exercised. What is the entry to record the compensation expense in 2018 and the entry to record upon exercise?
Victor, Inc. awarded 2,000 stock options to buy 2,000 common shares ($1 par) at an exercise price of $40 per share when the market price is $40 per share. The fair value of the options at the time of the award is equal to $100,000. The service period is 4 years. No forfeiture occurs and all options are exercised at the end of the service period. After the exercise of the options, total stockholder's equity (TSE) will change by the following amount: O TSE will increase by $80,000 Total. O TSE will increase by $100,000 Total. O TSE will increase by $180,000. O TSE will have a net $-0- change.