Question

Under its executive stock option plan, National Corporation granted 30 million options on January 1, 2018, that permit executives to purchase 30 million of the company's $1 par common shares within the next seven years, but not before December 31, 2020 (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 expire without being exercised 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 (ie., 10,000,000 should be entered as 10).) No Event Debit Credit Answer is complete but not entirely correct. General Journal Compensation expense Paid-in capitalstock options

IVE ALREADY TRIED ANSWERING WITH ALL OF THE ANSWERS LISTED IN BOTH IMAGES AND ALL WERE STATED AS INCORRECT

Answer 1

Answer -

Step - (1) - Information Given -

National Corporation granted 30 million options on January 1, 2018, that permit executives to purchase 30 million of the company’s $1 par common shares within the next seven years, but not before December 31, 2020 (the vesting date).

The exercise price = $25 per share.

The fair value of the options= $2 per option.

The options expire without being exercised.

.

Step - (2) -

Journal of National Corporation

General Journal	Debit ($) ( in millions)	Credit ($) ( in millions)
Paid-in Capital -- Stock Options [30 million options * $2] Paid-in Capital -- Expired Stock Options (To record options expired without being exercised)	60 -	- 60