Options expected to vest = 10,200 |
Stock option compensation cost = Fair value of option at grant |
Stock option compensation cost = $375,000 |
Vesting period = 2years |
Service period completed = 1 year |
Cumulative expense at end of year 1 = Total cost x Service period / Vesting period |
Cumulative expense at end of year 1 = $375,000 * 1/2 = $187,500 |
Previously recognized expense = 0 |
Stock option compensation expense for year 1 =$187,500 |
SINCE THERE IS NO CHANGE IN ESTIMATES, BOTH THE YEARS $187,500 WOULD BE RECORDED. |
Jan-19 | NO ENTRY | ||
31-12-20 | Stock option expense journal entry – Year 1 | ||
PARTICULARS | Debit | Credit | |
Stock option compensation expense | $187,500 | ||
Stock options | $187,500 |
31-12-20 | Stock option expense write off– Year 1 | ||
PARTICULARS | Debit | Credit | |
Income account | $187,500 | ||
Stock option compensation expense | $187,500 |
31-12-21 | Stock option expense journal entry – Year 2 | ||
PARTICULARS | Debit | Credit | |
Stock option compensation expense | $187,500 | ||
Stock options | $187,500 |
31-12-21 | Stock option expense write off– Year 2 | ||
PARTICULARS | Debit | Credit | |
Income account | $187,500 | ||
Stock option compensation expense | $187,500 |
Number of options exercised = 8160 | ||
Exercise price / share = $19.00 | ||
Par value of share = $5.00 | ||
Amount paid for shares = 8,160 * 19 = $155,040 | ||
PARTICULARS | Debit | Credit |
Stock options | $ 89,760 | |
Cash | $ 155,040 | |
Common stock | $ 40,800 | |
Securities premium | $ 204,000 | |
$ 244,800 | $ 244,800 | |
Securities premium = 8160*(30-5) = $204,000 | ||
Stock Options = 8160 * (30-19) = $ 89,760 |
Number of options lapsed = 10,200-8,160 = 2040 | |||
Expense reversed for those options | |||
31-12-23 | Stock option expense journal entry – Year 4 | ||
PARTICULARS | Debit | Credit | |
Stock options | $285,240 | ||
Income account | $ 285,240 | ||
(375000-89760) |
Current Attempt In Progress On January 1, 2019. Sheffield Corporation granted 10.200 options to key executives....
On January 1, 2019, Cullumber Corporation granted 10,300 options to key executives. Each option allows the executive to purchase one share of Cullumber's $5 par value common stock at a price of $20 per share. The options were exercisable within a 2-year period beginning January 1, 2021, if the grantee is still employed by the company at the time of the exercise. On the grant date, Cullumber's stock was trading at $26 per share, and a fair value option-pricing model...
On January 1, 2019, Riverbed Corporation granted 11,000 options to key executives. Each option allows the executive to purchase one share of Riverbed’s $5 par value common stock at a price of $19 per share. The options were exercisable within a 2-year period beginning January 1, 2021, if the grantee is still employed by the company at the time of the exercise. On the grant date, Riverbed’s stock was trading at $25 per share, and a fair value option-pricing model...
On January 1, 2016, Riverbed Corporation granted 10,300 options to key executives. Each option wows the executive to purchase one share of Riverbed's $5 par valve common stock at a price of $20 per share. The options were exercisable within a 2-year period beginning January 1, 2018, if the grantee is still employed by the company at the time of the exercise. On the grant date, Riverbed's stock was trading at $26 per share, and a fair value option pricing...
On January 1, 2016, Metlock Corporation granted 10,300 options to key executives. Each option allows the executive to purchase one share of Metlock’s $5 par value common stock at a price of $21 per share. The options were exercisable within a 2-year period beginning January 1, 2018, if the grantee is still employed by the company at the time of the exercise. On the grant date, Metlock’s stock was trading at $26 per share, and a fair value option-pricing model...
On November 1, 2020, Riverbed Company adopted a stock-option plan that granted options to key executives to purchase 24,900 shares of the company's $9 par value common stock. The options were granted on January 2, 2021, 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 determines the...
On November 1, 2020, Pronghorn Company adopted a stock-option plan that granted options to key executives to purchase 21,300 shares of the company's $11 par value common stock. The options were granted on January 2, 2021, 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 $40, and the fair value option-pricing model determines the...
On November 1, 2020, Sage Company adopted a stock-option plan that granted options to key executives to purchase 24,300 shares of the company’s $10 par value common stock. The options were granted on January 2, 2021, 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 $50, and the fair value option-pricing model determines the...
On November 1, 2017, Metlock Company adopted a stock-option plan that granted options to key executives to purchase 33,900 shares of the company’s $10 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 determines the...
On November 1, 2020, Sheffield Company adopted a stock-option plan that granted options to key executives to purchase 21,300 shares of the company’s $11 par value common stock. The options were granted on January 2, 2021, 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 $40, and the fair value option-pricing model determines the...
On November 1, 2017, Ayayai Company adopted a stock-option plan that granted options to key executives to purchase 24,300 shares of the company’s $10 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 $50, and the fair value option-pricing model determines the...