Homework Answers
In the given question, the stock options were given to the
employee. As the employee can exercise them at any time, vesting
period is nil. The company should record an adjusting entry. The
stock option compensation cost is calculated by multiplying number
of shares with fair value of option.
The entry is recorded by debiting stock option compensation expense
account, and crediting Stock Options account, which appears a
liability.
When the employee exercises the option, the Cash account is
debited, stock options account is debited and common stock account
is credited.
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16. A company provides a stock option to its treasurer that permits her to purchase, at...
The Munder Difflin Paper Corporation provides an executive stock option plan. Under the plan, the company...
The Munder Difflin Paper Corporation provides an executive stock option plan. Under the plan, the company granted options to the CEO on January 1, 2013, that permit her to acquire 12 million of the company's $1 par value common shares within the next five years, but not before December 31, 2014 (the vesting date). The exercise price is the market price of the shares on the date of the grant, $22 per share. The fair value of the options, estimated...
Question 10 of 15 On March 14, 2018, Mckensie exercised an incentive stock option (SO) granted to her her to purchase 1,000 shares of stock for $10 per share. When she exercised share. She sold t...
Question 10 of 15 On March 14, 2018, Mckensie exercised an incentive stock option (SO) granted to her her to purchase 1,000 shares of stock for $10 per share. When she exercised share. She sold the stock at a gain six months later, when the stock transaction, how much does Mckensie report on her 2018 return as short-term her option, the stock was trading at $15 pe was trading at $21 per share. As a resuit of tis capital gain...
On January 2, 2020, Buffalo Company purchases a call option for $270 on Merchant common stock....
On January 2, 2020, Buffalo Company purchases a call option for $270 on Merchant common stock. The call option gives Buffalo the option to buy 1,010 shares of Merchant at a strike price of $53 per share. The market price of a Merchant share is $53 on January 2, 2020 (the intrinsic value is therefore $0). On March 31, 2020, the market price for Merchant stock is $56 per share, and the time value of the option is $180. a-...
On January 2, 2020, Windsor Company purchases a call option for $300 on Merchant common stock....
On January 2, 2020, Windsor Company purchases a call option for $300 on Merchant common stock. The call option gives Windsor the option to buy 900 shares of Merchant at a strike price of $47 per share. The market price of a Merchant share is $47 on January 2, 2020 (the intrinsic value is therefore $0). On March 31, 2020, the market price for Merchant stock is $50 per share, and the time value of the option is $200. Prepare...
Exercise 16-4 On January 2, 2017, Sheridan Corporation purchased a call option for $345 on Walter's...
Exercise 16-4 On January 2, 2017, Sheridan Corporation purchased a call option for $345 on Walter's common shares. The call option gives Sheridan the option to buy 1,010 shares of Walter at a strike price of $28 per share any time during the next six months. The market price of a Walter share was $28 on January 2, 2017 (the intrinsic value was therefore $0). On March 31, 2017, the market price for Walter stock was $41 per share, and...
On January 1, 2018, Oriole Company granted stock options to officers and key employees for the...
On January 1, 2018, Oriole Company granted stock options to
officers and key employees for the purchase of 19000 shares of the
company's $1 par common stock at $22 per share as additional
compensation for services to be rendered over the next three years.
The options are exercisable during a five-year period beginning
January 1, 2021 by grantees still employed by Oriole. The
Black-Scholes option pricing model determines total compensation
expense to be $187500. The market price of common stock...
American Optical Corporation provides a variety of share-based compensation plans to its employees. Under its executive...
American Optical Corporation provides a variety of share-based compensation plans to its employees. Under its executive stock option plan, the company granted options on January 1, 2016, that permit executives to acquire 4 million of the company's $1 par common shares within the next five years, but not before December 31, 2017 (the vesting date). The exercise price is the market price of the shares on the date of grant, $14 per share. The fair value of the 4 million...
Derivatives: Problem 1: On January 2, 2017, Jones Company purchases a call option for $300 on...
Derivatives:
Problem 1: On January 2, 2017, Jones Company purchases a call option for $300 on Merchant common stock. The call option gives Jones the option to buy 1,000 shares of Merchant at a strike price of $50 per share. The market price of a Merchant share is $50 on January 2, 2017. On March 31, 2017, the market price for Merchant stock is $53 per share, and the time value of the option is $200. REQUIRED: (a) Prepare the...
Exercise 16-10 On November 1, 2017, Monty Company adopted a stock-option plan that granted options to...
Exercise 16-10 On November 1, 2017, Monty Company adopted a stock-option plan that granted options to key executives to purchase 26,700 shares of the company's $9 par value common stock. The options were granted on January 2, 2018, 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...
Heidi Software Corporation provides a variety of share-based compensation plans to its employees. Under its executive...
Heidi Software Corporation provides a variety of share-based compensation plans to its employees. Under its executive stock option plan, the company granted options on January 1, 2021, that permit executives to acquire 7 million of the company's $1 par common shares within the next five years, but not before December 31, 2022 (the vesting date). The exercise price is the market price of the shares on the date of grant, $58.00 per share. The fair value of the 7 million...
Question 10 of 15 On March 14, 2018, Mckensie exercised an incentive stock option (SO) granted to her her to purchase 1,000 shares of stock for $10 per share. When she exercised share. She sold the stock at a gain six months later, when the stock transaction, how much does Mckensie report on her 2018 return as short-term her option, the stock was trading at $15 pe was trading at $21 per share. As a resuit of tis capital gain...
Exercise 16-4 On January 2, 2017, Sheridan Corporation purchased a call option for $345 on Walter's common shares. The call option gives Sheridan the option to buy 1,010 shares of Walter at a strike price of $28 per share any time during the next six months. The market price of a Walter share was $28 on January 2, 2017 (the intrinsic value was therefore $0). On March 31, 2017, the market price for Walter stock was $41 per share, and...
On January 1, 2018, Oriole Company granted stock options to
officers and key employees for the purchase of 19000 shares of the
company's $1 par common stock at $22 per share as additional
compensation for services to be rendered over the next three years.
The options are exercisable during a five-year period beginning
January 1, 2021 by grantees still employed by Oriole. The
Black-Scholes option pricing model determines total compensation
expense to be $187500. The market price of common stock...
Derivatives:
Problem 1: On January 2, 2017, Jones Company purchases a call option for $300 on Merchant common stock. The call option gives Jones the option to buy 1,000 shares of Merchant at a strike price of $50 per share. The market price of a Merchant share is $50 on January 2, 2017. On March 31, 2017, the market price for Merchant stock is $53 per share, and the time value of the option is $200. REQUIRED: (a) Prepare the...
Exercise 16-10 On November 1, 2017, Monty Company adopted a stock-option plan that granted options to key executives to purchase 26,700 shares of the company's $9 par value common stock. The options were granted on January 2, 2018, 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...
Heidi Software Corporation provides a variety of share-based compensation plans to its employees. Under its executive stock option plan, the company granted options on January 1, 2021, that permit executives to acquire 7 million of the company's $1 par common shares within the next five years, but not before December 31, 2022 (the vesting date). The exercise price is the market price of the shares on the date of grant, $58.00 per share. The fair value of the 7 million...
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