Question

On January 1, 2021, M Company granted 96,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2023, and expire on January 1, 2027. Each option can be exercised to acquire one share of $1 par common stock for $9. An option-pricing model estimates the fair value of the options to be $3 on the date of grant.

What amount should M recognize as compensation expense for 2021?

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On January 1, 2021, M Company granted 94,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2023, and expire on January 1, 2027. Each option can be exercised to acquire one share of $1 par common stock for $9. An option-pricing model estimates the fair value of the options to be $4 on the date of grant.

If unexpected turnover in 2022 caused the company to estimate that 20% of the options would be forfeited, what amount should M recognize as compensation expense for 2022?

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On January 1, 2021, Albacore Company had 340,000 shares of its common stock issued and outstanding. Albacore issued a 7% stock dividend on July 1, 2021. On October 1, 2021, Albacore retired 12,000 of its common shares. When calculating basic earnings per share for 2021, what is the appropriate number of shares for Albacore to use in the denominator of the EPS fraction?

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Getaway Travel Company reported net income for 2021 in the amount of $59,000. During 2021, Getaway declared and paid $7,500 in cash dividends on its nonconvertible preferred stock. Getaway also paid $19,000 cash dividends on its common stock. Getaway had 49,000 common shares outstanding from January 1 until 19,000 new shares were sold for cash on July 1, 2021. A 2-for-1 stock split was granted on July 5, 2021. What is the 2021 basic earnings per share?

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Blue Cab Company had 70,000 shares of common stock outstanding on January 1, 2021. On April 1, 2021, the company issued 40,000 shares of common stock. The company had outstanding fully vested incentive stock options for 15,000 shares exercisable at $11 that had not been exercised by its executives. The end-of-year market price of common stock was $33 while the average price for the year was $32. The company reported net income in the amount of $369,915 for 2021. What is the diluted earnings per share (rounded)?

Answer 1

* * * 96,000x $3 = $289,000 $ 288,000 / 3 years = $ 96,000 Compensation expense for 202) = $ 96000 94000 x $ 4 = $376,000 $ 376000 x 80%. = $ 300, 800 $ 300,800 x 213 = $ 200, 533 $ 200,533 - $ 96000 = $ 104, 533 Compensation expense foo 2022 = $104,533 (340,000 X 1-07) -C12,000 x 312) - 363,800 - 3000 = 360,800 The appoopofale number of shade foo Albacooe to use Po the denominator of the EPS Fraction Ps => 360,800 $59.00 - $7,500 C 49,000 X 2) +(19,000x 512X2) => $51,500 / (98000) +(19000) =) $ 57, 500/ 117,000 => $0.44 The 2021 basic eamings peo share S $0.44 70000 + (40,000x 9/12)+C10000 - 5,156 ) = 104,844 C15000 x $11)/$32 = 5,156 fom options - $369,915 .$3.53 101,8uy The délceted earning coshare = $3.53 of