The following events occurred regarding the company's executive compensation plan. 2. On 1/1/x4, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 20,000 shares of common stock at $40 per share. The par value is $10 per share. 3. On 2/1/x4, options were granted to each of five executives to purchase 20,000 shares. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on 2/1/x6. It is assumed that the options were for services performed equally in 20x4 and 20x5. The Black-Scholes option pricing model determines total compensation expense to be $2,100,000. 3. At 2/1/x6, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited Prepare the journal entries for 2/1/x6

The following events occurred regarding the company's executive compensation plan. 2. On 1/1/x4, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 20,000 shares of common stock at $40 per share. The par value is $10 per share. 3. On 2/1/x4, options were granted to each of five executives to purchase 20,000 shares. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on 2/1/x6. It is assumed that the options were for services performed equally in 20x4 and 20x5. The Black-Scholes option pricing model determines total compensation expense to be $2,100,000. 3. At 2/1/x6, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited Prepare the journal entries for 2/1/x6

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 19E

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Prepare the necessary entries from 1/1/17 through 2/1/19 for the following events using the fair value method. 1.) On 1/1/17, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 30,000 shares of common stock at $40 per share. The par value is $10 per share 2.) On 2/1/17, options were granted to each of five executives to purchase 30,000 shares. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on 2/1/19. It is assumed that the options were for services performed equally in 2017 and 2018. The Black-Scholes option-pricing model determines the total compensation expense to be $3,200,000. 3.) On 2/1/19, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited.
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he board of directors of UT Wireless, Inc. is considering two compensation plans for the CEO of the company. The first would pay the CEO a salary of $300,000 for the upcoming year. The second would pay the CEO a salary of $150,000 and provide the CEO with a stock option to buy 100,000 shares of stock for $11 per share. The current price per share of UT Wireless, Inc. stock is $9 per share. The stock option expires at the end of the year. Why might shareholders prefer the second payment plan? As part of your answer, calculate the break-even point for the CEO to obtain the same compensation under option two as he or she would under option one. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). The board of directors of UT Wireless, Inc. is considering two compensation plans for the CEO of the company. The first would pay the CEO a salary of $300,000 for the upcoming year. The second would pay the CEO a salary of $150,000 and provide the CEO…
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