INTERMEDIATE ACCOUNTING RMU 9TH EDITION
9th Edition
ISBN: 9781260998726
Author: SPICELAND
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 19, Problem 19.5BE
To determine
Stock options: Stock options are the stock-based compensation plans provided in the form of an option to buy certain number of shares for a certain price during certain period.
Debit and credit rules:
- Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in
stockholders’ equity accounts. - Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.
To determine: The amount of compensation expense Company HM should record for the year ended December 31, 2019
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Case 2On January 1, 2018, Olaf company granted share options to key employees to supplement their compensation. The options given were 200,000 ordinary shares of P10 par value at an option price of P15 per share. The market price of this share on January 1, 2018 was P20. The fair value of each share option on January 1, 2018 is P8. The options were exercisable beginning January 1, 2018 and expire on December 31, 2020. On December 31, 2018, all share options were exercised. What is the entry to record the compensation expense in 2018 and the entry to record upon exercise?
Ex 3. On December 31, 2026, Orange Mountain Co. grants its employees options to purchase
1,000 shares of $1 par common stock for $5 per share. The options vest after 1 year and expire
on December 31, 2031. On the date of grant, the shares are trading for $10 per share and the
options have a fair value of $3 each.
Make the journal entry to recognize the compensation expense associated with the options on
December 31, 2027.
Assume all the options were exercised on January 1, 2028. Make the journal entry to recognize
the exercise of the stock options.
What additional information would you need to determine the effect of the stock options on
Dilutive EPS?
Item3 Item 3 Feldmann Corporation permits any of its employees to buy shares directly from the company through payroll deduction. There are no brokeragefees and shares can be purchased at a 10% discount. During 2024, employees purchased 26 million shares; during this same period, the shares had a marketprice of S20 per share at the end of the year. Feldmann's 2024 pretax earnings will be reduced by: Multiple Choice S52 million. S468 million. S520 million. SO .
Chapter 19 Solutions
INTERMEDIATE ACCOUNTING RMU 9TH EDITION
Ch. 19 - Prob. 19.1QCh. 19 - Prob. 19.2QCh. 19 - The Tax Code differentiates between qualified...Ch. 19 - Stock option (and other share-based) plans often...Ch. 19 - What is a simple capital structure? How is EPS...Ch. 19 - Prob. 19.6QCh. 19 - Blake Distributors had 100,000 common shares...Ch. 19 - Why are preferred dividends deducted from net...Ch. 19 - Prob. 19.9QCh. 19 - The treasury stock method is used to incorporate...
Ch. 19 - The potentially dilutive effect of convertible...Ch. 19 - How is the potentially dilutive effect of...Ch. 19 - Prob. 19.13QCh. 19 - If stock options and restricted stock are...Ch. 19 - Wiseman Electronics has an agreement with certain...Ch. 19 - Prob. 19.16QCh. 19 - When the income statement includes discontinued...Ch. 19 - Prob. 19.18QCh. 19 - Prob. 19.19QCh. 19 - (Based on Appendix B) LTV Corporation grants SARs...Ch. 19 - Prob. 19.1BECh. 19 - Prob. 19.2BECh. 19 - Stock options LO192 Under its executive stock...Ch. 19 - Prob. 19.4BECh. 19 - Prob. 19.5BECh. 19 - Prob. 19.6BECh. 19 - Prob. 19.7BECh. 19 - Prob. 19.8BECh. 19 - Prob. 19.9BECh. 19 - Performance-based options LO192 Refer to the...Ch. 19 - Prob. 19.11BECh. 19 - Prob. 19.12BECh. 19 - EPS; nonconvertible preferred shares LO197 At...Ch. 19 - Prob. 19.14BECh. 19 - Prob. 19.15BECh. 19 - Prob. 19.16BECh. 19 - Prob. 19.1ECh. 19 - Prob. 19.2ECh. 19 - Prob. 19.3ECh. 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 - EPS; shares issued; stock dividend LO195, LO196...Ch. 19 - Prob. 19.13ECh. 19 - EPS; stock dividend; nonconvertible preferred...Ch. 19 - EPS; net loss; nonconvertible preferred stock;...Ch. 19 - EPS; stock dividend; nonconvertible preferred...Ch. 19 - Prob. 19.17ECh. 19 - EPS; stock dividend; nonconvertible preferred...Ch. 19 - EPS; stock dividend; nonconvertible preferred...Ch. 19 - EPS; shares issued; stock options LO196 through...Ch. 19 - EPS; convertible preferred stock; convertible...Ch. 19 - Prob. 19.22ECh. 19 - Prob. 19.23ECh. 19 - Prob. 19.24ECh. 19 - Prob. 19.25ECh. 19 - EPS; concepts; terminology LO195 through LO1913...Ch. 19 - FASB codification research LO192 The FASB...Ch. 19 - Prob. 19.28ECh. 19 - Prob. 19.29ECh. 19 - Prob. 19.30ECh. 19 - Restricted stock units; cash settlement Appendix...Ch. 19 - Stock options; forfeiture; exercise LO192 On...Ch. 19 - Stock options; graded vesting LO192 January 1,...Ch. 19 - Stock options; graded vesting; measurement using a...Ch. 19 - Stock options; graded vesting; IFRS LO192, LO1914...Ch. 19 - Prob. 19.5PCh. 19 - Prob. 19.6PCh. 19 - Prob. 19.7PCh. 19 - Prob. 19.8PCh. 19 - EPS from statement of retained earnings LO194...Ch. 19 - EPS from statement of shareholders equity LO194...Ch. 19 - EPS; non convertible preferred stock; treasury...Ch. 19 - EPS; non convertible preferred stock; treasury...Ch. 19 - EPS; non convertible preferred stock; treasury...Ch. 19 - EPS; convertible preferred stock; convertible...Ch. 19 - EPS; antidilution LO194 through LO1910, LO1913...Ch. 19 - EPS; convertible bonds; treasury shares LO194...Ch. 19 - Prob. 19.17PCh. 19 - Prob. 19.18PCh. 19 - EPS; options; restricted stock; additional...Ch. 19 - Prob. 19.1BYPCh. 19 - Communication Case 192 Stock options; basic...Ch. 19 - Prob. 19.3BYPCh. 19 - Real World Case 195 Share-based plans; Walmart ...Ch. 19 - Prob. 19.6BYPCh. 19 - Prob. 19.7BYPCh. 19 - Analysis Case 198 EPS concepts LO194 through...Ch. 19 - Prob. 19.9BYPCh. 19 - Prob. 19.10BYPCh. 19 - Communication Case 1911 Dilution LO199 I thought...Ch. 19 - Real World Case 1912 Reporting EPS; discontinued...Ch. 19 - Analysis Case 1913 Analyzing financial statements;...Ch. 19 - Analysis Case 1915 Kelloggs EPS; PE ratio;...Ch. 19 - Prob. 19.16BYPCh. 19 - Prob. 1CCTCCh. 19 - Air FranceKLM Case IFRS LO199 Air FranceKLM (AF),...
Knowledge Booster
Similar questions
- QUESTION 19 On January 1, 2020, Korsak, Inc. established a stock appreciation rights plan for its executives. It entitled them to receive cash at any time during the next four years for the difference between the market price of its common stock and a pre-established price of $20 on 120,000 SARS. Current market prices of the stock are as follows: January 1, 2020 December 31, 2020 December 31, 2021 December 31, 2022 $35 per share 38 per share 30 per share 33 per share Comperisation expense relating to the plan is to be recorded over a four-year period beginning January 1, 2020. On December 31, 2022, 50,000 SARS are exercised by executives. What amount of compensation expense should Korsak recognize for the year ended December 31, 2022? $312,000 $780,000 $1,140,000 O $2,340,000arrow_forwardExercise 18-11 (Algo) Retirement of shares [LO18-5] In 2024, Borland Semiconductors entered into the transactions described below. In 2021, Borland had issued 170 million shares of its $1 par common stock at $29 per share. Required: Assuming that Borland retires shares it reacquires, record the appropriate journal entry for each of the following transactions: Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). 1. On January 2, 2024, Borland reacquired 13 million shares at $28.00 per share. 2. On March 3, 2024, Borland reacquired 13 million shares at $31 per share. 3. On August 13, 2024, Borland sold 1 million shares at $37 per share. 4. On December 15, 2024, Borland sold 2 million shares at $31 per share. View transaction listarrow_forward9 The Josh Cutler Corporation provides restricted stock to certain executives. Under the plan, the company granted 30 million shares on January 1, 2024, which vest in four years. The fair value of the shares is $14.90. No forfeitures are anticipated. Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the restricted stock. 2. & 3. Prepare the appropriate journal entries (if any). Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Determine the total compensation cost pertaining to the restricted stock. Note: Enter your answer in millions (l.e., 10,000,000 should be entered as 10). Total compensation cost millionarrow_forward
- Exercise 19-8 (Static) Stock options exercise; expirations [LO19-2] Martinez Audio Visual Incorporated offers an incentive stock option plan to its regional managers. On January 1, 2024, options were granted for 40 million $1 par common shares. • The exercise price is the market price on the grant date-$8 per share. • Options cannot be exercised prior to January 1, 2026, and expire December 31, 2030. • The fair value of the 40 million options, estimated by an appropriate option pricing model, is $1 per option. Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. to 5. Prepare the appropriate journal entries to record compensation expense on December 31, 2024 and 2025. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2026, when the market price is $9 per share and the entry on December 31, 2030, when the remaining options that have vested expire without being exercised.arrow_forwardExercise 19-11 (Algo) Employee share purchase plan; MacroApps [LO19-3] MacroApps Corporation's disclosure notes for the year ending June 30, 2020, included the following regarding its $0.00000625 par common stock: Employee Stock Purchase Plan-We have an ESPP for all eligible employees. Shares of our common stock may be purchased by employees at three-month intervals at 85% of the fair market value on the last trading day of each three-month period. Employees may purchase shares having a value not exceeding 15% of their gross compensation during an offering period. Employees purchased the following shares during the periods presented: (Shares in millions) Year Ended June 30, Shares purchased Average price per share As of June 30, 2020, 96 million shares of our common stock were reserved for future issuance through the ESPP. Required: Prepare the journal entry that summarizes MacroApps's employee share purchases for the year ending June 30, 2020. Note: If no entry is required for a…arrow_forwardExercise 19-11 (Algo) Employee share purchase plan; MacroApps [LO19-3] MacroApps Corporation's disclosure notes for the year ending June 30, 2020, included the following regarding its $0.00000625 par common stock: Employee Stock Purchase Plan-We have an ESPP for all eligible employees. Shares of our common stock may be purchased by employees at three-month intervals at 85% of the fair market value on the last trading day of each three-month period. Employees may purchase shares having a value not exceeding 15% of their gross compensation during an offering period. Employees purchased the following shares during the periods presented: (Shares in millions) Year Ended June 30, Shares purchased Average price per share As of June 30, 2020, 96 million shares of our common stock were reserved for future issuance through the ESPP. Required: Prepare the journal entry that summarizes MacroApps's employee share purchases for the year ending June 30, 2020. Note: If no entry is required for a…arrow_forward
- Exercise 19-25 (Static) EPS; new shares; contingent agreements [LO19-6, 19-12] Anderson Steel Company began 2021 with 600,000 shares of common stock outstanding. On March 31, 2021, 100,000 new shares were sold at a price of $45 per share. The market price has risen steadily since that time to a high of $50 per share at December 31. No other changes in shares occurred during 2021, and no securities are outstanding that can become common stock. However, there are two agreements with officers of the company for future issuance of common stock. Both agreements relate to compensation arrangements reached in 2020. The first agreement grants to the company president a right to 10,000 shares of stock each year the closing market price is at least $48. The agreement begins in 2022 and expirés in 2025. The second agreement grants to the controller a right to 15,000 shares of stock if she is still with the firm at the end of 2029. Net income for 2021 was $2,000,000. Required: Compute Anderson…arrow_forwardExercise 19-11 (Static) Employee share purchase plan; Microsoft [LO19-3] Microsoft Corporation's disclosure notes for the year ending June 30, 2020, included the following regarding its $0.00000625 par common stock: Employee Stock Purchase Plan-We have an ESPP for all eligible employees. Shares of our common stock may be purchased by employees at three-month intervals at 90% of the fair market value on the last trading day of each three-month period. Employees may purchase shares having a value not exceeding 15% of their gross compensation during an offering period. Employees purchased the following shares during the periods presented: (Shares in millions) Year Ended June 30, Shares purchased 2018 13 $76.40 Average price per share. $142.22 As of June 30, 2020, 96 million shares of our common stock were reserved for future issuance through the ESPP. No Required: Prepare the journal entry that summarizes Microsoft's employee share purchases for the year ending June 30, 2020. Note: If no…arrow_forwardProblem 1 (Adapted)On January 1, 2017, Gliezel company issued options to key employees to purchase 20,000 ordinary shares of P100 par value at P125 per share. On such date, the market value of ordinary share is P150 per share. The fair value of each share option is P30. These options are exercisable starting January 1, 2019 and expire one year after. Options covering 17,500 shares are exercised on January 15, 2019 and the remaining options expired. a. Compute compensation expense for the year 2017, 2018 and 2019.b. Prepare journal entries to record the compensation each year as well as the exercise and expiration of the share optionsarrow_forward
- Exercise 19-11 (Static) Employee share purchase plan; Microsoft [LO19-3] Microsoft Corporation's disclosure notes for the year ending June 30, 2020, included the following regarding its $0.00000625 par common stock Employee Stock Purchase Plan-We have an ESPP for all eligible employees. Shares of our common stock may be purchased by employees at three-month intervals at 90% of the fair market value on the last trading day of each three-month period. Employees may purchase shares having a value not exceeding 15% of their gross compensation during an offering period. Employees purchased the following shares during the periods presented: (Shares in millions) Year Ended June 30, Shares purchased Average price per share. 2020 9 2019 11 $142.22 2018 13 $104.85 $76.40 As of June 30, 2020, 96 million shares of our common stock were reserved for future issuance through the ESPP Required: Prepare the journal entry that summarizes Microsoft's employee share purchases for the year ending June 30,…arrow_forwardEXERCISE 3 The Red Fox Corporation granted 100 share options to each of its 200 employees on January 1,2020. The option plan entitles the employees to buy a share of the entity's P 200 par ordinary share capital at P 226 per share. Based on an option pricing model used by Red Fox, the fair value of the option on January 1,2020 was determined to be P32. The plan further provides that the employees should be in the service of the company until at least December 31,2022. The options are exercisable starting January 1,2023 and expire on December 31,2024. At January 1,2020, it was estimated that 15% of the employees who received the options will resign during the next three years. During 2020, 10 employees left the company. Át December 31,2020, 15 employees were expected to leave before December 31,2022. During 2021, 12 more employees left, and at the end of the year, it was expected that 5 more would resign before December 31,2022; although é employees left during 2022. Employees numbering…arrow_forwardChe Exercise 19-22 (Static) EPS; restricted stock (LO19-11] As part of its executive compensation plan, Vertovec Inc. granted 54,000 of its no-par common shares to executives, subject to forfelture if employment is terminated within three years. Vertovec's common shares have a market price of $5 per share on January 1, 2020, the grant date of the restricted stock award, as well as on December 31, 2021. 800,000 shares were outstanding at January 1, 2021. Net income for 2021 was $120,000. Required: Compute Vertovec's basic and diluted earnings per share for the year ended December 31, 2021. (Enter your answers In thousands.) Numerator Denominator Earnings per Share Basic Diluted 排 1 of 3 Next > Prevarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning