Sandhill Ltd. has an executive stock option plan, details of which follow:●The plan entitles the CEO to purchase 8,400 common shares at $25 each, following a vesting period.The vesting period is January 1, 2023 through December 31, 2024.The exercise period is January 1, 2025 through December 31, 2027.The CEO exercises 6,100 of the stock options on June 30, 2025. The rest of the options are allowed to lapse.The shares' market prices per share are as follows:January 1, 2023December 31, 2023December 31, 2024June 30, 2025$25$27$28$30Sandhill uses an option-pricing model to value the stock options. When granted, the options are estimated to have a fair value of $4each. This estimate remains unchanged during the vesting period.Assuming that Sandhill has a December 31 year end, prepare the required journal entries as at the following dates. (Credit account titlesare automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required,select "No Entry" for the account titles and enter O for the amounts.) DateJan. 1, 2023Dec. 31, 2023June 30, 2025Jan. 1, 2028 VAccount TitlesDebitCredit

A stock option plan is a program that allows employees of a company to purchase shares of the…

Answered: Sandhill Ltd. has an executive stock…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

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Top Rock Corporation has an executive stock option plan which grants the Chief Executive Officer (CEO) the ability to purchase common shares following the conclusion of a vesting period. The CEO exercised some of the stock options she received on November 14, 2024. The CEO allowed the remainder of the options to lapse. Details regarding the stock option plan follow: Number of shares that can be purchased by the CEO: 35,360 Option price per share $ 18.00 Market price per share on January 1, 2021 $ 18.00 Market price per share on November 14, 2024 $ 23.40 Number of stock options exercised by CEO on November 14, 2024: 22,984 The vesting period for the stock option plan is January 1, 2021 to December 31, 2022. The exercise period for the stock option plan is January 1, 2023 to December 31, 2025. Top Rock Corporation determines, using an option-pricing model, that each option has the following fair value on January 1, 2021: $ 4.00. Top Rock has a year end of December 31. Assume that Top…
Metropolis Company adopted a stock-option plan on October 12, 2021. The plan provided 20,000 shares of $2 par value common stock to three of its officers: Kent Clark, Lane Lois, and Luther Lexx. On January 1, 2022, stock options were granted to the three officers (one option enables the officer to purchase one share of common stock) as follows: Kent Clark (president): 12,000 options; 8,000 for services performed in 2022, 3,000 for services performed in 2023, and 1,000 for services performed in 2024. Lane Lois (controller): 5,000 options; 2,000 for services performed in 2022, 2,000 for services performed in 2023, and 1,000 for services performed in 2024. Luther Lexx (assistant controller): 3,000 options; 1,000 for services performed in 2022, 1,500 for services performed in 2023, 500 for services performed in 2024. The market value of Metropolis Company common stock at the grant date was $32 per share. The stock options permit the officers to purchase the common stock at a price of $19…
Q. M Company issued 99,000 stock options to key executives on January 1, 2021. The options must be exercised by December 31, 2023, and will expire on January 1, 2027. Each option entitles the holder to one share of $1 par ordinary stock for $12. On the date of award, an option-pricing model estimates the fair value of the options to be $4. What should M deduct as compensation expense in 2021?
On January 1, 2019, Roswall Corporation’s common stock is selling for $55 per share. On this date, Roswall creates a compensatory share option plan for its 60 key employees. The plan document states that each employee may purchase 500 shares of its $10 par common stock for $55 per share after working for the company for 3 years. On this date, based on an option pricing model, Roswall estimates that each option has a value of $18. Roswall expects that employee turnover rate will be 15% over the service period. Because of lower turnover, at the end of 2020, Roswall changes its estimated turnover rate to 12% for the entire service period. At the end of 2021, the options vest for 54 employees. On January 13, 2022, 10 executives exercise their options when the stock is selling for $75 per share. Required: 1. Prepare a schedule of Roswall’s compensation computations for its compensatory share option plan for 2019 through 2021. 2. Prepare Roswall’s memorandum entry for the grant date…
Berg Company adopted a stock-option plan on November 30, 2019, that provided that 70,000 shares of $5 par value stock be designated as available for the granting of options to officers of the corporation at a price of $9 a share. The market price was $12 a share on November 30, 2020. On January 2, 2020, options to purchase 28,000 shares were granted to president Tom Winter—15,000 for services to be rendered in 2020 and 13,000 for services to be rendered in 2021. Also on that date, options to purchase 14,000 shares were granted to vice president Michelle Bennett—7,000 for services to be rendered in 2020 and 7,000 for services to be rendered in 2021. The market price of the stock was $14 a share on January 2, 2020. The options were exercisable for a period of one year following the year in which the services were rendered. The fair value of the options on the grant date was $4 per option. In 2021, neither the president nor the vice president exercised their options because the market…
In order to retain certain key executives, Wildhorse Corporation granted them incentive stock options on December 31, 2024. A total of 152000 options were granted at an option price of $35 per share. Market prices of the stock were as follows: December 31, 2025 December 31, 2026 The options were granted as compensation for executives' services to be rendered over a two-year period beginning January 1, 2025. The Black-Scholes option-pricing model determined total compensation expense to be $1501000. $44 per share 49 per share What amount of compensation expense should Wildhorse recognize as a result of this plan for the year ended December 31, 2025 under the fair value method? O $750500 $1653000 $1501000 $2622950
Bramble Company adopted a stock-option plan on November 30, 2019, that provided that 63,700 shares of $5 par value stock be designated as available for the granting of options to officers of the corporation at a price of $9 a share. The market price was $12 a share on November 30, 2020.On January 2, 2020, options to purchase 29,100 shares were granted to president Tom Winter—16,200 for services to be rendered in 2020 and 12,900 for services to be rendered in 2021. Also on that date, options to purchase 13,800 shares were granted to vice president Michelle Bennett—6,900 for services to be rendered in 2020 and 6,900 for services to be rendered in 2021. The market price of the stock was $13 a share on January 2, 2020. The options were exercisable for a period of one year following the year in which the services were rendered. The fair value of the options on the grant date was $4 per option.In 2021, neither the president nor the vice president exercised their options because the market…
Bramble Company adopted a stock-option plan on November 30, 2019, that provided that 63,700 shares of $5 par value stock be designated as available for the granting of options to officers of the corporation at a price of $9 a share. The market price was $12 a share on November 30, 2020.On January 2, 2020, options to purchase 29,100 shares were granted to president Tom Winter—16,200 for services to be rendered in 2020 and 12,900 for services to be rendered in 2021. Also on that date, options to purchase 13,800 shares were granted to vice president Michelle Bennett—6,900 for services to be rendered in 2020 and 6,900 for services to be rendered in 2021. The market price of the stock was $13 a share on January 2, 2020. The options were exercisable for a period of one year following the year in which the services were rendered. The fair value of the options on the grant date was $4 per option.In 2021, neither the president nor the vice president exercised their options because the market…
Vancouver Inc. has an executive stock option plan. The plan entitles the President to purchase common shares following the conclusion of a 2-year vesting period that begins on the grant date of January 1, 2020. The president can exercise the stock options at any time from January 1, 2022 to December 31, 2026. The President exercises some of the stock options on June 30, 2022, but allows the rest of the options to lapse. Other details regarding the plan are as follows: Option price per share $ 51.17 Number of shares that can be purchased under the stock option plan 58,300 Number of shares purchased by the President on June 30, 2022 48,400 Market price of shares on January 1, 2020 $ 51.17 Market price of shares on December 31, 2020 $ 59.00 Market price of shares on December 31, 2021 $ 59.00 Market price of shares on June 30, 2022 $ 66.00 Vancouver estimates total…
On January 1, 2020, The Red Hot Company established a share option plan for its selected senior employees. A total of 30,000 options were granted that permit said employees to purchase 30,000 shares of P 20 par ordinary share capital at P 35 per share. Options are exercisable beginning on January 1,2023 and can be exercised anytime from January 1,2023 through December 31,2024.At January 1, 2020, the market price for the Red Hot Company share option was P 8, based on an option pricing model used by the entity. All, but 2,000 share options were exercised on December 31,2023.REQUIRED:a) Computation of compensation expense for years 2020, 2021 and 2022.b) Entries as a result of the foregoing for year 2020 through 2023, inclusive.
Olde Corporation provides an executive stock option plan. Under the plan, the company granted options on January 1, 2024, that permit executives to acquire 2.5 million of the company's $1 par value common shares within the next five years, but not before December 31, 2025 (the vesting date). The exercise price is the market price of the shares on the date of the grant, $13 per share. The fair value of the options, estimated by an appropriate option pricing model, is $2 per option. No forfeitures are anticipated Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the options, assuming the fair value approach has been selected. 2. & 4. Prepare the appropriate journal entries (if any). Complete this question by entering your answers in the tabs below. Req 1 Reg 2 to 4 Determine the total compensation cost pertaining to the options, assuming the fair value approach has been selected. Note: Enter your answer in millions rounded to 2 decimal places (i.e., 5,500,000…
Prepare journal entries relating to the stock option plan on the following dates using the fair value method. If no entry is needed, write "No Entry Necessary." Show your work for partial credits. On November 1, 2019, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 30,000 shares of common stock at $40 per share. The par value is $10 per share. On January 1, 2020, options were granted to each of five executives to purchase 30,000 shares. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. It is assumed that the options were for services performed equally in 2020 and 2021. The Black-Scholes option pricing model determines total compensation expense to be $3,200,000. At February 1, 2022, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited on January 1, 2028

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