GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
9th Edition
ISBN: 9781260089042
Author: J. David Spiceland
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 19, Problem 19.7BE
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 journalize: The expired options before being exercised in the books of Corporation N
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Exercise 19-2O (Algo) EPS; shares issued; stock options [LO19-6, 19-7, 19-8, 19-9]
Stanley Department Stores reported net income of $776,000 for the year ended December 31, 2021.
Additional Information:
Common shares outstanding
Incentive stock options (vested in 2020) outstanding throughout 2021
(Each option is exercisable for one common share at an exercise price of $23.00)
During the year, the market price of Stanley's common stock averaged $27.60 per share.
On Aug. 30, Stanley sold 15,000 common shares.
Stanley's only debt consisted of $36, 000 of 10% short-term bank notes.
The company's income tax rate is 25%.
Jan. 1, 2021
90,000
24,000
Required:
Compute Stanley's basic and diluted earnings per share for the year ended December 31, 2021. (Enter your answers in thousands. Do
not round intermediate calculations)
Numerator
Denominator
Earnings per Share
Basic
%3D
Diluted
%3D
Help
Save & E
Che
Problem 19-1 (Algo) Stock options; forfeiture; exercise [LO19-2]
On October 15, 2020, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On
January 1, 2021, 30 million stock options were granted, exercisable for 30 million shares of Ensor's $1 par common stock. The options
are exercisable between January 1, 2024, and December 31, 2026, at 80% of the quoted market price on January 1, 2021, which was
$15. The fair value of the 30 million options, estimated by an appropriate option pricing model, is $5 per option. Ensor chooses the
option to recognize forfeitures only when they occur.
Ten percent (3 million) of the options were forfeited when an executive resigned in 2022. All other options were exercised on July 12,
2025, when the stock's price jumped unexpectedly to $30 per share.
Required:
1. When is Ensor's stock option measurement date?
2. Determine the compensation expense for the stock option plan in 2021.…
Question 3
On 6 July 2021, Falta Limited paid $300 to purchase a put option on Zebra Limited when the
market price per ordinary shares was $120.
The option gives Falta Limited to sell 500 shares at an exercise price of $120 and the option expires
on 1 February 2022.
Market price per share
$
Time value of put Option
$
Date
30 September 2021
31 December 2021
123
180
115
100
1 February 2022
112
30
Required:
Prepare the journal entries for Falta for the following dates:
(a)
On 6 July 2021 to record the investment in the put option.
(b)
On 30 September 2021 when Falta Limited prepared the financial statements.
(c)
On 31 December 2021 when Falta Limited prepared the financial statements.
(d)
On 1 February 2022 when Falta Limited settled the call option.
Chapter 19 Solutions
GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
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
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Brief Exercise 19-6 (Algo) Stock options; exercise [L019-2] Under its executive stock option plan, National Corporation granted 30 million options on January 1, 2021, that permit executives to purchase 30 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, $25 per share. The fair value of the options, estimated by an appropriate option pricing model, is $2 per option. Suppose that the options are exercised on April 3, 2024, when the market price is $31 per share. Ignoring taxes, what journal entry will National record? (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).) X Answer is not complete. No Date General Journal Debit Credit 1 April 03, 2024 Cash 25 x Paid-in capital - stock options 25 Xarrow_forwardExercise 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_forwardA-12: Put option On March 1, 2022, Ferguson Corp. purchased a put option on shares of SST stock. The contract was for 100 shares at a strike price of $90 per share, with an expiration date of May 31, 2022. Ferguson settled the option on May 5 (assume cash settlement). Additional information pertaining to the option is provided below. March 1 March 31 May 5 Price of SST stock: $90 $80 $85 Time value of option: $50 $40 $30 Required:1. What is cost of the option paid by Ferguson Corp. on March 1, 2022?2. Compute the balance of the option account on May 5 before the settlement.arrow_forward
- -/1 Question 12 of 17 View Policies Current Attempt in Progress On September 1, 2020, Coronado Industris reacquired 29200 shares of its $10 par value common stock for $15 per share. Coronado uses the cost method to account for treasury stock. The journal entry to record the reacquisition of the stock should debit O Treasury Stock for $438000. O Common Stock for $292000. O Common Stock for $292000 and Paid-in Capital in Excess of Par for $146000. O Treasury Stock for $29200O. Save for Later Attempts: 0 of 1 used Submit Answer MacBook IIarrow_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_forwardProblem 16-40 (LO 16-2) (Algo) Assume that on January 1, year 1, ABC Incorporated issued 7,650 stock options with an estimated value of $18 per option. Each option entitles the owner to purchase one share of ABC stock for $27 a share (the per share price of ABC stock on January 1, year 1, when the options were granted). The options vest at the end of the day on December 31, year 2. All 7,650 stock options were exercised in year 3 when the ABC stock was valued at $33 per share. Identify ABC's year 1, 2, and 3 tax deductions and book-tax differences (indicate as favorable or unfavorable and as permanent or temporary) associated with the stock options under the following alternative scenarios: Required: a. The stock options are incentive stock options. b. The stock options are nonqualified stock options. Complete the following table. (For all requirements, leave no answer blank. Enter zero if applicable and select "N/A" if no effect.) Year 1 Year 2 Year 3 Book Tax differences Favorable…arrow_forward
- Problem 16-40 (LO 16-2) (Algo) Assume that on January 1, year 1, ABC Incorporated issued 5,500 stock options with an estimated value of $13 per option. Each option entitles the owner to purchase one share of ABC stock for $26 a share (the per share price of ABC stock on January 1, year 1, when the options were granted). The options vest at the end of the day on December 31, year 2. All 5,500 stock options were exercised in year 3 when the ABC stock was valued at $33 per share. Identify ABC's year 1, 2, and 3 tax deductions and book-tax differences (indicate as favorable or unfavorable and as permanent or temporary) associated with the stock options under the following alternative scenarios: Required: a. The stock options are incentive stock options. b. The stock options are nonqualified stock options. Complete the following table. (For all requirements, leave no answer blank. Enter zero if applicable and select "N/A" if no effect.) Under ASC 718 a. Incentive Stock Options b.…arrow_forwardPage of 5 ZOOM Practice Exercises - Stock Options On November 1, 2020, DaBaby Company adopted a stock-option plan that granted options to key executives to purchase 42,500 shares of the company's $10 par value common stock. The options were granted on January 2, 2021 and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $30, and the fair value option-pricing model determines the total compensation expense to be $210,000. 3. All of the options were exercised during the year 2023: 20,100 on January 15 when the market price was $48, and 22,400 on June 1 when the market price was $56 a share. Prepare journal entries relating to the stock option plan for the years 2021, 2022, and 2023. Assume that the employee performs services equally in 2022 and 2023. General Journal Debit Credit ASA ENG INTIarrow_forwardPage of 5 ZOOM Practice Exercises - Stock Options On November 1, 2020, Pronghorn Company adopted a stock-option plan that granted options to key executives to purchase 38,100 shares of the company's $10 par value common stock. The options were granted on January 2, 2021 and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $571,500. 4. All of the options were exercised during the year 2023: 25,400 on January 3 when the market price was $67, and 12,700 on May 1 when the market price was $76 a share. Prepare journal entries relating to the stock option plan for the years 2021, 2022, and 2023. Assume that the employee performs services equally in 2022 and 2023. General Journal Debit Credit ENG ASA qb INTL *- Prisc F4 F5 F6 F7 F8 F9 F10 F11 F12 Ins 23arrow_forward
- Exercise 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_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_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education