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Share Option Compensation Plans On November 6, 2018, Gunpowder Corp.’s board of directors approved a share option plan for key executives. On January 2, 2019, a specific number of share options were granted. These options were exercisable between January 2, 2021, and December 31, 2023, at 90% of the quoted market price on January 2, 2019. The service period is for 2019 and 2020. Some options were forfeited when an executive resigned in 2020. All other options were exercised during 2021. Required: 1. How should Gunpowder determine the compensation expense, if any, for the share option plan in 2019? 2. What is the effect of forfeiture of the share options on Gunpowder’s financial statements for 2020? 3. What is the effect of the share option plan on the balance sheet at December 31, 2021? Be specific as to the changes in balance sheet accounts between November 6, 2018, and December 31,2021.

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

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Chapter
Section
Chapter 15, Problem 6C
Textbook Problem

Share Option Compensation Plans On November 6, 2018, Gunpowder Corp.’s board of directors approved a share option plan for key executives. On January 2, 2019, a specific number of share options were granted. These options were exercisable between January 2, 2021, and December 31, 2023, at 90% of the quoted market price on January 2, 2019. The service period is for 2019 and 2020. Some options were forfeited when an executive resigned in 2020. All other options were exercised during 2021.

Required:

  1. 1. How should Gunpowder determine the compensation expense, if any, for the share option plan in 2019?
  2. 2. What is the effect of forfeiture of the share options on Gunpowder’s financial statements for 2020?
  3. 3. What is the effect of the share option plan on the balance sheet at December 31, 2021? Be specific as to the changes in balance sheet accounts between November 6, 2018, and December 31,2021.

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Chapter 15 Solutions

Intermediate Accounting: Reporting And Analysis
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