Question
In: Accounting
Begining of year 1 A company issued 6,000 restricted share units and 10,000 stock options to...
Begining of year 1
A company issued 6,000 restricted share units and 10,000 stock options to employees. The shares are currently trading for $10 per share. The option exercise price is set equal to $10 and the fair value of each option is $3. The vesting service period for the restricted share units and stock options is 18 months.
Other information: The firm expects all of the employees receiving restricted share units and stock options will remain for the 18 month required service period.
At the end of year 2 employees exercised all of their 10,000 options. The fair value of the firm’s stock on this date is $19 per share. The firm’s stock had a value of $13 per share on June 30 of Year 2 when the restricted stock units and the stock options vested.
The firm receives a deduction equal to the employee’s gain on the exercise of the option when the option is exercised and a deduction for value of restricted share units when the restrictions elapse.
Pre tax accounting income year 1: $900,000
Pre tax accounting income year 2: $1,200,000
Tax rate 30%.
Please find the taxable income, deferred tax asset and libility for year 1 and 2.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Begining of year 1 Issued 6,000 restricted share units and 10,000 stock options to employees. The...
Begining of year 1
Issued 6,000 restricted share units and 10,000 stock options to
employees. The shares are currently trading for $10 per share. The
option exercise price is set equal to $10 and the fair value of
each option is $3. The vesting service period for the restricted
share units and stock options is 18 months.
Other information Given: At the end of year 2 employees
exercised all of their 10,000 options. The fair value of the firm’s
stock...
Begining of year 1 Issued 6,000 restricted share units and 10,000 stock options to employees. The...
Begining of year 1
Issued 6,000 restricted share units and 10,000 stock options to
employees. The shares are currently trading for $10 per share. The
option exercise price is set equal to $10 and the fair value of
each option is $3. The vesting service period for the restricted
share units and stock options is 18 months.
Other information: The firm expects all of the employees
receiving restricted share units and stock options will remain for
the 18 month required...
At the beginning of the first year, the Olympic company issued 10,000 stock options to an...
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10,000 stock options to an executive at an exercise price of US $
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On the grant date, the estimated fair value of the stock option
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Knowledge Check 01 At January 1, Year 1, Edwards Company issued 10,000 stock options permitting employees...
Knowledge Check 01
At January 1, Year 1, Edwards Company issued 10,000 stock options
permitting employees to buy 10,000 shares of stock for $50 per
share. The vesting schedule (graded-vesting) and value of the
options that vest over the 3-year period is estimated at January 1,
Year 1, as set forth in the following table.
Vesting Date
Amount Vesting
Fair Value per Option
Dec. 31, Year 1
10
%
$
2
Dec. 31, Year 2
30
%
$
3
Dec....
What is the difference between granting stock options and granting restricted stock units? What is the...
What is the difference between granting stock options and
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On January 1, Year 1, LL Company issued 100 stock options with an exercise price of...
On January 1, Year 1, LL Company issued 100 stock options with
an exercise price of $18 each to five employees (total 500
options). The options vest on December 31, Year 2, after the
employees have completed two years of service. LL expects that all
employees vest in the options.
Date
Share Price
Fair value of option
Jan. 1, Year 1
$21
$12
December 31, Year 1
$21
$13
December 31, year 2
$30
$15
Assume that this is the...
On January 1, Year 1, LL Company issued 100 stock options with an exercise price of...
On January 1, Year 1, LL Company issued 100 stock options with
an exercise price of $18 each to five employees (total 500
options). The options vest on December 31, Year 2, after the
employees have completed two years of service. LL expects that all
employees vest in the options.
Date Share Price Fair value of option
Jan. 1, Year 1 $21 $12
December 31, Year 1 $21 $13
December 31, year 2 $30 $15
Assume that this is the...
What is restricted stock? How do restricted stock awards differ from restricted stock units (RSUs)? Describe...
What is restricted stock? How do restricted stock awards differ
from restricted stock units (RSUs)? Describe how compensation
expense is determined and recorded for a restricted stock award
plan?
1. ABC Inc., began the year with 10,000 units in stock but finished with 5,000 units....
1. ABC Inc., began the year with 10,000 units in stock but
finished with 5,000 units. It produced 45,000 units for the period.
Its selling price is $12 per unit, variable manufacturing cost is
$5 per unit, and variable selling is $3 per unit. Fixed
manufacturing and selling costs are $100,000 and $77,000
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The firm notes that variable cost per unit (both mfg and SGA)
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• $200,000
• $160,000
• $80,000
• $40,000
16. Marine Corporation issued common stock in...
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