Trafford Company is a calendar-year U.S. firm with operations in several countries. At January 1, 2024, the company had issued 72,000 executive stock options permitting executives to buy 72.000 shares of stock for $25. The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting). Trafford does not choose to account for the options on a straight-line basis. The fair value of the options is estimated as follows: Vesting Date December 31, 2024 December 31, 2025 December 31, 2026 Multiple Choice $100.000 What is the compensation expense related to the options to be recorded in 2025? $273.600 $216.000 Amount Vesting 20% 30% 50% $288.000 Fair Value per Option $5 $ 10 $ 15

Trafford Company is a calendar-year U.S. firm with operations in several countries. At January 1, 2024, the company had issued 72,000 executive stock options permitting executives to buy 72.000 shares of stock for $25. The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting). Trafford does not choose to account for the options on a straight-line basis. The fair value of the options is estimated as follows: Vesting Date December 31, 2024 December 31, 2025 December 31, 2026 Multiple Choice $100.000 What is the compensation expense related to the options to be recorded in 2025? $273.600 $216.000 Amount Vesting 20% 30% 50% $288.000 Fair Value per Option $5 $ 10 $ 15

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 7RE: On January 1, 2019, Phoenix Corporation adopts a performance-based share option plan for 25...

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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.
Tama Companys capital structure consists of common stock and convertible bonds. At the beginning of 2019, Tama had 15,000 shares of common stock outstanding; an additional 4,500 shares were issued on May 4. The 7% convertible bonds have a face value of 80,000 and were issued in 2016 at par. Each 1,000 bond is convertible into 25 shares of common stock; to date, none of the bonds have been converted. During 2019, the company earned net income of 79,200 and was subject to an income tax rate of 30%. Required: Compute the 2019 diluted earnings per share.
Trafford Company is a calendar-year U.S. firm with operations in several countries. At January 1, 2024, the company had issued 44,000 executive stock options permitting executives to buy 44,000 shares of stock for $25. The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting). Trafford does not choose to account for the options on a straight-line basis. The fair value of the options is estimated as follows: Vesting Date Amount Vesting Fair Value per Option Issued Executive Stock 31-Dec-24 20% $5 $7 44,000 shares 40,000 31-Dec-25 30% $10 $8 Permitting Execuutive to buy shares of Stock 31-Dec-26 50% $15 $12 44,000 shares at $25 40,000 What is the compensation expense related to the options to be recorded in 2025?…
Yellow Company is a calendar-year firm with operations in several countries. At January 1, 2021, the company had issued 40,000 executive stock options permitting executives to buy 40,000 shares of stock for $30. The vesting schedule is 25% the first year, 25% the second year, and 50% the third year (graded-vesting). The fair value of the options is estimated as follows: Vesting Date AmountVesting Fair Valueper Option Dec. 31, 2021 25 % $ 6 Dec. 31, 2022 25 % $ 7 Dec. 31, 2023 50 % $ 9 Assuming Yellow prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), what is the compensation expense related to the options to be recorded in 2022?
Under its executive stock option plan, National Corporation granted 15 million options on January 1, 2021, that permit executives to purchase 15 million of the company’s $1 par common shares within the next six 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, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. Suppose that unexpected turnover during 2022 caused the forfeiture of 5% of the stock options. Compute the amount of compensation expense for 2022 and 2023
Under its executive stock option plan, National Corporation granted 21 million options on January 1, 2021, that permit executives to purchase 21 million of the company’s $1 par common shares within the next six 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, $26 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. Suppose that unexpected turnover during 2022 caused the forfeiture of 5% of the stock options. Compute the amount of compensation expense for 2022 and 2023. (Enter your answers in millions rounded to 2 de Answer is not complete. Compensation expense ($ in millions) 2022 2023 cimal places (i.e., 5,500,000 should be entered as 5.50))
Niles Company granted 42 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. the common shares have a market price of 14 per share on january 1, 2017, the grant date of the restricted stock award. when calculating dilluted EPS at december 31,2018, what will be the net increase in the denominator of teh EPS fraction if the market price of teh common shares averaged 14 per share during 2018?
Witter House is a calendar-year firm with 300 million common shares outstanding throughout 2018 and 2019.As part of its executive compensation plan, at January 1, 2017, the company had issued 30 million executivestock options permitting executives to buy 30 million shares of stock for $10 within the next eight years, but notprior to January 1, 2020. The fair value of the options was estimated on the grant date to be $3 per option.In 2018, Witter House began granting employees stock awards rather than stock options as part of its equitycompensation plans and granted 15 million restricted common shares to senior executives at January 1, 2018.The shares vest four years later. The fair value of the stock was $12 per share on the grant date. The averageprice of the common shares was $12 and $15 during 2018 and 2019, respectively.The stock options qualify for tax purposes as an incentive plan. The restricted stock does not. The company’snet income was $150 million and $160 million in 2018…
On January 1, 2021, Adams-Meneke Corporation granted 24 million incentive stock options to division managers, each permitting holders to purchase one share of the company’s $1 par common shares within the next six 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, currently $22 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. Management’s policy is to estimate forfeitures. No forfeitures are anticipated. Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the options on January 1, 2021.2. Prepare the appropriate journal entry to record compensation expense on December 31, 2021.3. Unexpected turnover during 2022 caused an estimate of the forfeiture of 5% of the stock options. Prepare the appropriate journal entry(s) on December 31, 2022 and 2023 in response to the new estimate.
Witter House is a calendar-year firm with 400 million common shares outstanding throughout 2018 and 2019. As part of its executive compensation plan, at January 1, 2017, the company had issued 45 million executive stock options permitting executives to buy 45 million shares of stock for $14 within the next eight years, but not prior to January 1, 2020. The fair value of the options was estimated on the grant date to be $3 per option. In 2018, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 25 million restricted common shares to senior executives at January 1, 2018. The shares vest four years later. The fair value of the stock was $20 per share on the grant date. The average price of the common shares was $20 and $30 during 2018 and 2019, respectively. The stock options qualify for tax purposes as an incentive plan. The restricted stock does not. The company's net income was $250 million and $260 million…
Isadore Bell Company granted 8 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $3 per share on January 1, 2021, the grant date. When calculating diluted EPS at December 31, 2022, what will be the net increase in the denominator of the EPS fraction if the market price of the common shares averaged $4 per share during 2022?
On January 1, 2021, Adams-Meneke Corporation granted 25 million incentive stock options to division managers, each permitting holders to purchase one share of the company’s $1 par common shares within the next six 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, currently $10 per share. The fair value of the options, estimated by an appropriate option pricing model, is $3 per option. Management’s policy is to estimate forfeitures. No forfeitures are anticipated. Ignore taxes.Required:1. Determine the total compensation cost pertaining to the options on January 1, 2021.2. Prepare the appropriate journal entry to record compensation expense on December 31, 2021.3. Unexpected turnover during 2022 caused an estimate of the forfeiture of 6% of the stock options. Prepare the appropriate journal entry(s) on December 31, 2022 and 2023 in response to the new estimate.