Required: Prepare the journal entries required on the books of Sunco Limited on each of the following dates: May 1, 2020 May 31, 2020 June 16, 2020
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 January 1,2020, V Co. issued 100 share options to each of its 15 executive officers. The options…
A: Compensation expense = Number of employees × Number of options granted × Fair value ×Expired…
Q: Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January…
A: For issue of Employee stock option, an employee compensation expense will be recorded equal to the…
Q: der its executive stock option plan, ABC Corp. granted 30 million options on January 1, 2021, that…
A: Employee stock option are offered by company to their emt as equity compensation plans. These grants…
Q: nder its executive stock option plan, National Corporation granted 30 million options on January 1,…
A: Stock option plan refers to the offer of shares of the company to the employees at a price lower…
Q: During 2019, ABC Co. issued 10,000 shares of P100 par value convertible preference shares for P110…
A: Share premium: The excess amount paid per share over the face value is called share premium. The…
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: During 2021, Lamb Company issued 10,000 shares of P100 par value convertible preference share for…
A: Solution: Nos of common shares issued on conversion of preferred shares = 10000*3 = 30000 shares…
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: Monroe Ltd acquired a parcel of 50 000 call options in Sunrise Ltd on 1 November 2018. The price of…
A: Comprehensive income statement: A statement that reflects operating income reported from the income…
Q: Ultimate Company granted 100 share options to each of its 300 employees on January 2, 2018. The…
A: IFRS 2 Share-based Payment deals with the accounting for share-based payment transactions like share…
Q: The Red Fox Corporation granted 100 share options to each of its 200 employees on January 1,2020.The…
A: Number of employees expected to exercise the option as on December 31 2020 = 200 - 10 - 15 = 175…
Q: On January 1, 2020, Bloody Red Company issued to its chief executive officer share options for the…
A: Share options are options or rights being provided to the employees so that they can purchase shares…
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 Jan. 1, 2020, GARBO Company granted XYZ, its executive, compensatory share options to buy 10,000…
A: Share options are the rights given to the employees to purchase the stock in the company for price…
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: By what net amount should equity increase as a result of the grant and exercise of the options?
A: Share options are the rights given to the employees to purchase the stock in the company for price…
Q: On June 30, 2019, New Company granted compensatory share option for 30,000 P20 par value ordinary…
A: Share Option For the employees share option which can be prevailed for retain the employees into the…
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: On January 1, 2020, ABC Corporation granted an employee an option to purchase 3,000 shares of ABC’s…
A: Intrinsic value(30-20) = 10 ( market value for January 2020 is 30 and purchase value is…
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: Assume that Sarazan Company has a share-option plan for top management. Each share option represents…
A: Hi thanks for the posting question. As per company guidelines, questions with multiple sub-parts,…
Q: Edwards and Everett, Inc.had the following items in its capital structure at December 31, 2020:…
A: EPS:- The full form of EPS is Earning Per Share. Earnings Per share is refereed as the monetary…
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: On January 1, 2021, WASP Company granted 10,000 share options to each of its 5 managers. The options…
A: Options expected to vest (Options * Employees) (10,000 * 5) 50000 Stock option compensation cost…
Q: During 2020, Empresas ABC issued 4,000 preferred shares with a par value of $ 10 to $ 11 each. Each…
A: Compute total number of common shares converted from preferred share options as shown below:
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, 2020, ABC Company purchased an equipment with a cash price of P2,000,000. The supplier…
A: Issue of shares is one of the important source of finance that is being used by the business. In…
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: the required year-end adjusting entry for this investment is:
A: The purchase cost of shares is $45000 whereas the fair value at the end of the year is $42160. Hence…
Q: During 2020, Maria Company purchased trading securities with the following cost and market value on…
A: Given information Security B = 10,000 shares Sold at p150 per share Trading investments are…
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 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: Under its executive stock option plan, N Corporation granted options on January 1, 2021, that permit…
A: A stock option is a right but not an obligation provided by the company either to the employees of…
Q: Under its executive stock option plan, National Corporation granted 30 million options on January 1,…
A: The vesting period is defined as the time period an employee should work to get the employee stock…
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: On January 1, 2021, WASP Company granted 10,000 share options to each of its 5 managers. The options…
A: This question deals with the IFRS 2 "Share based payment" As per IFRS 2, when employer gives stock…
Q: 5. Under its executive stock option plan, VF Corporation granted options on January 1, 2021, that…
A: Shareholders’ equity shows how much owner has invested in the business.
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 March 1, 2022, Jensen Corp. purchased a call option on shares of YTV stock. The contract was for…
A: Call option refers to the contract between the buyer and the seller which authorizes the buyer to…
Q: On January 1, 2021, Adams-Meneke Corporation granted 20 million incentive stock options to division…
A: Stock option plans are options to provided to employees to purchase company stock at a future date…
On May 1, 2020, Sunco Limited purchased a call option from Moonco Corporation. The option gave Sunco the right to purchase shares in a third company, Galaxy Company. Sunco settled the options in cash on June 16, 2020. Following are additional details pertaining to the option:
|
Number of shares that can be purchased with the call option |
7,400 |
|
Call option exercise price per share |
$ 10.03 |
|
Market price per share of Galaxy Company on May 1, 2020 |
$ 10.03 |
|
Price paid by Sunco to purchase the option |
$ 1,800 |
|
Market price per share of Galaxy Company on May 31, 2020 |
$ 11.24 |
|
Fair value of call option on May 31, 2020 |
$ 9,200 |
|
Market price per share of Galaxy Company on June 16, 2020 |
$ 11.29 |
|
Fair value of call option on June 16, 2020 |
$ 8,800 |
Sunco has a year end of May 31.
|
Required: |
|
Prepare the dates: |
|
May 1, 2020 |
|
May 31, 2020 |
|
June 16, 2020 |
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.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, 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.
- 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 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 :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 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 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 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 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.On January 1, 2020, ABC Corporation granted an employee an option to purchase 3,000 shares of ABC’s P5 par value ordinary share at P20 each. The option became exercisable on December 31, 2022. The options was exercised on January 10, 2023. The market prices of ABC’s share capital were as follows: January 1, 2020 – P30; December 31, 2020 – P50; December 31,2021 – 55; December 31, 2022 – 65; January 10, 2023 – P75. The company cannot reliably determine the fair value of the share option, so it decided to use the intrinsic method. For the year 2022, how much should ABC recognize as compensation expense?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?