On January 1, 2020, the company granted 5 executive employees the option to purchase 450,000 shares (90,000 shares each) of common stock at $120 per share. Under the Black-Scholes option pricing model, total compensation expense is estimated to be $300,000. The option becomes exercisable on January 1, 2023, after the employees complete three years of service. However, on March 31, 2021, two out of the five employees were fired due to poor economic conditions. The market price of the company's stock was $355 on March 31, 2021, and $358 on December 31, 2021. How would this affect the statement of stockholders equity for 2021?

On January 1, 2020, the company granted 5 executive employees the option to purchase 450,000 shares (90,000 shares each) of common stock at $120 per share. Under the Black-Scholes option pricing model, total compensation expense is estimated to be $300,000. The option becomes exercisable on January 1, 2023, after the employees complete three years of service. However, on March 31, 2021, two out of the five employees were fired due to poor economic conditions. The market price of the company's stock was $355 on March 31, 2021, and $358 on December 31, 2021. How would this affect the statement of stockholders equity for 2021?

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 7E

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