Solution:
1) The measurement date is always the grant date on 1st January 2018, 38 million stock options were granted.
2)Determine the compensation expense for the stock option plan in 2018
Estimated fair value per option 3
Options granted 38 million
Fair value of award 114
The total compensation is to be allocated to expense over the three year service(vesting) period;million per year
2021-2023 $114 / 3 years = $38 million per year
3)
Prepare necessary journal entries
Year | Account title & explanation | Debit | Credit |
2019 | Compensation expense(114*80%*2/3)-38 | 22.8 | |
Paid in capital - stock option | 22.8 | ||
2020 | Compensation expense(114*80%*3/3)-22.8-38 | 31 | |
Paid in caapital - stock option | 31 |
On October 15, 2017, the board of directors of Ensor Materials Corporation approved a stock option...
On October 15, 2017, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On January 1, 2018, 32 million stock options were granted, exercisable for 32 million shares of Ensor's $1 par common stock. The options are exercisable between January 1, 2021, and December 31, 2023, at 90% of the quoted market price on January 1, 2018, which was $20. The fair value of the 32 million options, estimated by an appropriate option...
On October 15, 2017, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On January 1, 2018, 32 million stock options were granted, exercisable for 32 million shares of Ensor's $1 par common stock. The options are exercisable between January 1, 2021, and December 31,, 2023, at 80% of the quoted market price on January 1, 2018, which was $30. The fair value of the 32 million options, estimated by an appropriate option...
On October 15, 2020, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On January 1, 2021, 26 million stock options were granted, exercisable for 26 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 $20. The fair value of the 26 million options, estimated by an appropriate option...
Exercise 19-8 Stock options exercise; expirations (LO19-21 Walters Audio Visual Inc. offers an Incentive stock option plan to its regional managers. On January 1, 2018, options were granted for 32 million $1 par common shares. The exercise price is the market price on the grant date-$9 per share. Options cannot be exercised prior to January 1, 2020, and expire December 31, 2024. The fair value of the 32 million options, estimated by an appropriate option pricing model, is $1 per...
Problem 19-6 Stock option plan; deferred tax effect of a nonqualifying plan [LO19-2] JBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan. JBL granted options to key officers on January 1, 2018. The options permit holders to acquire 6 million of the company's $1 par common shares for $30 within the next six years, but not before January 1, 2021 (the vesting date). The market...
SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2018. The options permit holders to acquire 19 million of the company's $1 par common shares for $16 within the next six years, but not before January 1, 2021 (the vesting date). The market price of the shares on the date of grant is $18 per share....
On January 1, 2018, Adams-Meneke Corporation granted 30 million incentive stock options to division managers, each permitting holders to purchase one share of the company's $1 par common shares within the next six 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, currently $40 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. Management's...
On January 1, 2018, Adams-Meneke Corporation granted 45 million incentive stock options to division managers, each permitting holders to purchase one share of the company's $1 par common shares within the next six 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, currently $28 per share. The fair value of the options, estimated by an appropriate option pricing model, is $6 per option. Management's...
On January 1, 2021, Adams-Meneke Corporation granted 30 million incentive stock options to division managers, each permitting holders to purchase one share 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, currently $40 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. Management's...
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, 2018, that permit executives to acquire 19 million of the company's $1 par common shares within the next five years, but not before December 31, 2019 (the vesting date). The exercise price is the market price of the shares on the date of grant, $27.50 per share. The fair value of the 19 million...