Question
In: Accounting
On January 1, 2018, Adams-Meneke Corporation granted 90 million incentive stock options to division managers, each...
On January 1, 2018, Adams-Meneke Corporation granted 90 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 $20 per share. The fair value of the options, estimated by an appropriate option pricing model, is $2 per option. Management’s policy is to estimate forfeitures. No forfeitures are anticipated. Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the options on January 1, 2018. 2. Prepare the appropriate journal entry to record compensation expense on December 31, 2018. 3. Unexpected turnover during 2019 caused an estimate of the forfeiture of 5% of the stock options. Determine the adjusted compensation cost, and prepare the appropriate journal entry(s) on December 31, 2019 and 2020. (Please show calculations, not just answers.)
Solutions
ekkarill92 answered 1 year agoRelated Solutions
On January 1, 2018, Adams-Meneke Corporation granted 90 million incentive stock options to division managers, each...
On January 1, 2018, Adams-Meneke Corporation granted 90 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 $20 per share. The fair value of
the options, estimated by an appropriate option pricing model, is
$2 per option. Management’s...
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On January 1, 2018, Adams-Meneke Corporation granted 15 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 $50 per share. The fair value of
the options, estimated by an appropriate option pricing model, is
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part a
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