Question
In: Accounting
JBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share-based...
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 6.5 million of the company's $1 par
common shares for $36 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 $40 per share. The fair value of the 6.5
million options, estimated by an appropriate option pricing model,
is $6 per option. Because the plan does not qualify as an incentive
plan, JBL will receive a tax deduction upon exercise of the options
equal to the excess of the market price at exercise over the
exercise price. The tax rate is 40%.
Required:
1. Determine the total compensation cost
pertaining to the incentive stock option plan.
2. & 3. Record the necessary journal entries
on December 31, 2018, 2019, and 2020. Assume all of the options are
exercised on August 21, 2022, when the market price is $41 per
share.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
JBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share-based...
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 5 million of the company's $1 par common
shares for $31 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 $35 per share....
q. 27 JBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety...
q. 27
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 6.5 million of the company's $1 par
common shares for $22 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 $26...
BL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share-based...
BL 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 9 million of the company's $1 par common
shares for $38 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 $42 per share....
SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based...
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, 2021. The options
permit holders to acquire 21 million of the company’s $1 par common
shares for $14 within the next six years, but not before January 1,
2024 (the vesting date). The market price of the shares on the date
of grant is $16 per share....
SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based...
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, 2021. The options
permit holders to acquire 9 million of the company’s $1 par common
shares for $25 within the next six years, but not before January 1,
2024 (the vesting date). The market price of the shares on the date
of the grant is $27 per...
SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based...
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, 2021. The options
permit holders to acquire 12 million of the company’s $1 par common
shares for $11 within the next six years, but not before January 1,
2024 (the vesting date). The market price of the shares on the date
of grant is $13 per share....
SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based...
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, 2021. The options
permit holders to acquire 23 million of the company’s $1 par common
shares for $12 within the next six years, but not before January 1,
2024 (the vesting date). The market price of the shares on the date
of grant is $14 per share....
Air Travel Inc. manufactures a wide variety of parts for commercial aircraft, including airplane engines. The...
Air Travel Inc. manufactures a wide variety of parts for
commercial aircraft, including airplane engines. The component is
purchased by OEM (Original Equipment Manufacturers) such as Boeing,
for use in the larger and more powerful outboards. The units sell
for $10,000, and sales volume averages 2,000 units per year.
Recently, Air Travel’s major competitor lowered the price of the
equivalent part of $9,500. The market was very competitive, and
AirTravel realized it had to meet the new price or lose...
Exercise 19-9 (Algo) Stock options; exercise [LO19-2] SSG Cycles manufactures and distributes motorcycle parts and supplies....
Exercise 19-9 (Algo) Stock options; exercise [LO19-2]
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, 2021. The options
permit holders to acquire 23 million of the company’s $1 par common
shares for $12 within the next six years, but not before January 1,
2024 (the vesting date). The market price of the shares on the...
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 11 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, $52.00 per share. The fair
value of the 11 million...
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