EBK INTERMEDIATE ACCOUNTING
3rd Edition
ISBN: 9780136946465
Author: SANNELLA
Publisher: VST
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Chapter 19, Problem 19.1P
a.
To determine
To calculate: The compensation expense for year 2.
Given Information:
Number of shares granted is 150,000.
Exercise price of the shares is $20.
Fair value at the grant date is $66.
Vesting period is 3 years.
Vesting probability is 100% in each year.
b.
To determine
The compensation expense for year 3 and journal entry of it.
Given Information:
Number of shares granted is 150,000.
Fair value at the grant date is $66.
Exercise price of the shares is $20.
Vesting period is 3 years.
Vesting probability is 100% in year 1 and 2.
Vesting probability is 75% in year 3
c.
To determine
The journal entry at the time of expiration of remaining stock.
Given Information:
Number of shares granted is 150,000.
Fair value at the grant date is $66.
Exercise price of the shares is $20.
Vesting period is 3 years.
Vesting probability is 100% in year 1 and 2.
Vesting probability is 75% in year 3
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In connection with a stock option plan for the benefit of key employees, ABC Co. intends to distribute treasury shares when the options are exercised. These shares were bought in 20x3 at P42 per share. On January 1, 20x4, ABC Co. granted stock options for 100,000 shares at P38 per share as additional compensation for services to be rendered over the next 3 years. The options are exercisable during a 2-year period beginning January 1, 20x7, by grantees still employed by ABC Co. Market price of the ABC Co.’s stock was P47 per share at the grant date. The fair value of the stock option is P12 on grant date. No stock options were terminated during 20x4. Compute the amount of expense that should be recognized for 20x4.
Allied Electronics offered an incentive stock plan to its employees. On January 1, Year 1, 100,000 options were granted for 100,000 $10 par common shares. The exercise price equals the $25 market price of the common stock on the grant date. The vesting period is 3 years. The options cannot be exercised before January 1, Year 4, and expire on December 31, Year 5. Each option has a value of $15 based upon an option pricing model.
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Accounting for Stock Options
On April 1 of Year 1, Badger Corp. announced a stock option incentive plan for its top executives. The plan provides certain executives stock options for the company's common stock.
Each option allows for the purchase of one share of common stock, par $1, at a standard option price of $25 per share. The rights are nontransferable and are exercisable three years
after the grant date and prior to five years from the grant date. Continuing employment is required through the exercise date, and the requisite service period ends on the first possible
exercise date.
On April 1 of Year 1, 4,000 options were granted to employees when the market price was $30 per share. Using an option-pricing model, the fair value of the options granted was
$36,000. Employees exercised 2,400 options on June 30 of Year 4, when the market price of the stock was $45 per share.
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a. Compute the total amount of compensation cost for the grant made on April 1 of Year 1.
$ 36,000 ✔
b.…
Chapter 19 Solutions
EBK INTERMEDIATE ACCOUNTING
Ch. 19 - What is the allocation period used to expense...Ch. 19 - How do companies account for stock-based...Ch. 19 - Do companies with equity-based compensation plans...Ch. 19 - When accounting for employee stock options, will a...Ch. 19 - Prob. 19.5QCh. 19 - Prob. 19.6QCh. 19 - Prob. 19.7QCh. 19 - Prob. 19.8QCh. 19 - Prob. 19.9QCh. 19 - Prob. 19.10Q
Ch. 19 - Prob. 19.1MCCh. 19 - Prob. 19.2MCCh. 19 - Prob. 19.3MCCh. 19 - Prob. 19.4MCCh. 19 - Prob. 19.5MCCh. 19 - Prob. 19.6MCCh. 19 - Prob. 19.7MCCh. 19 - Prob. 19.8MCCh. 19 - Prob. 19.1BECh. 19 - Prob. 19.2BECh. 19 - Prob. 19.3BECh. 19 - Prob. 19.4BECh. 19 - Prob. 19.5BECh. 19 - Prob. 19.6BECh. 19 - Employee Stock Options, Liability-Classified...Ch. 19 - Prob. 19.8BECh. 19 - Prob. 19.9BECh. 19 - Prob. 19.10BECh. 19 - Prob. 19.11BECh. 19 - Prob. 19.12BECh. 19 - Prob. 19.13BECh. 19 - Prob. 19.14BECh. 19 - Prob. 19.15BECh. 19 - Prob. 19.16BECh. 19 - Prob. 19.17BECh. 19 - Prob. 19.18BECh. 19 - Prob. 19.19BECh. 19 - Prob. 19.20BECh. 19 - Prob. 19.21BECh. 19 - Prob. 19.22BECh. 19 - Prob. 19.23BECh. 19 - Prob. 19.24BECh. 19 - Prob. 19.25BECh. 19 - Prob. 19.26BECh. 19 - Prob. 19.27BECh. 19 - Prob. 19.28BECh. 19 - Prob. 19.1ECh. 19 - Prob. 19.2ECh. 19 - Employee Stock Options. Equity-Classified Awards....Ch. 19 - Prob. 19.4ECh. 19 - Prob. 19.5ECh. 19 - Prob. 19.6ECh. 19 - Prob. 19.7ECh. 19 - Prob. 19.8ECh. 19 - Prob. 19.9ECh. 19 - Prob. 19.10ECh. 19 - Prob. 19.11ECh. 19 - Prob. 19.12ECh. 19 - Prob. 19.13ECh. 19 - Prob. 19.14ECh. 19 - Prob. 19.15ECh. 19 - Prob. 19.16ECh. 19 - Prob. 19.1PCh. 19 - Prob. 19.2PCh. 19 - Prob. 19.3PCh. 19 - Prob. 19.4PCh. 19 - Prob. 19.5PCh. 19 - Prob. 19.6PCh. 19 - Prob. 19.7PCh. 19 - Prob. 19.8PCh. 19 - Prob. 19.9PCh. 19 - Prob. 19.10PCh. 19 - Prob. 19.11PCh. 19 - Prob. 19.12PCh. 19 - Prob. 1JCCh. 19 - Prob. 2FSCCh. 19 - Prob. 1SSCCh. 19 - Prob. 2SSCCh. 19 - Basis for Conclusions Case 1: Are Employee Stock...Ch. 19 - Prob. 2BCC
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