Question
In: Accounting
Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January...
Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 40 million $1 par common shares. The exercise price is the market price on the grant date—$8 per share. Options cannot be exercised prior to January 1, 2023, and expire December 31, 2027. The fair value of the 40 million options, estimated by an appropriate option pricing model, is $1 per option.
Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan.
2. to 5. Prepare the appropriate journal entries to record compensation expense on December 31, 2021 and 2022. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share and the entry on December 31, 2027, when the remaining options that have vested expire without being exercised.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January...
Walters Audio Visual Inc. offers an incentive stock option plan
to its regional managers. On January 1, 2018, options were granted
for 24 million $1 par common shares. The exercise price is the
market price on the grant date—$7 per share. Options cannot be
exercised prior to January 1, 2020, and expire December 31, 2024.
The fair value of the 24 million options, estimated by an
appropriate option pricing model, is $1 per option. Required: 1.
Determine the total compensation...
Walters Audio Visual, Inc. offers a stock option plan to its regional managers. On January 1,...
Walters Audio Visual, Inc. offers a stock option plan to its
regional managers. On January 1, 2018, 40 million options were
granted for 40 million $1 par common shares. The exercise price is
the market price on the grant date, $8 per share. Options cannot be
exercised prior to January 1, 2020, and expire December 31, 2024.
The fair value of the options, estimated by an appropriate option
pricing model, is $2 per option. Because the plan does not qualify...
Walters Audio Visual, Inc. offers a stock option plan to its regional managers. On January 1,...
Walters Audio Visual, Inc. offers a stock option plan to its
regional managers. On January 1, 2018, 45 million options were
granted for 45 million $1 par common shares. The exercise price is
the market price on the grant date, $10 per share. Options cannot
be exercised prior to January 1, 2020, and expire December 31,
2024. The fair value of the options, estimated by an appropriate
option pricing model, is $2 per option. Because the plan does not
qualify...
Exercise 19-8 Stock options exercise; expirations [LO19-2] Walters Audio Visual Inc. offers an incentive stock option...
Exercise 19-8 Stock options exercise; expirations [LO19-2]
Walters Audio Visual Inc. offers an incentive stock option plan
to its regional managers. On January 1, 2018, options were granted
for 36 million $1 par common shares. The exercise price is the
market price on the grant date—$10 per share. Options cannot be
exercised prior to January 1, 2020, and expire December 31, 2024.
The fair value of the 36 million options, estimated by an
appropriate option pricing model, is $1 per...
Exercise 19-8 (Algo) Stock options exercise; expirations [LO19-2] Walters Audio Visual Inc. offers an incentive stock...
Exercise 19-8 (Algo) Stock options exercise; expirations
[LO19-2]
Walters Audio Visual Inc. offers an incentive stock option plan
to its regional managers. On January 1, 2021, options were granted
for 64 million $1 par common shares. The exercise price is the
market price on the grant date—$6 per share. Options cannot be
exercised prior to January 1, 2023, and expire December 31, 2027.
The fair value of the 64 million options, estimated by an
appropriate option pricing model, is $1...
Citron Inc. offers an employee stock option plan (ESOP) to several of its senior executives. 20,000...
Citron Inc. offers an employee stock option plan (ESOP) to
several of its senior executives. 20,000 options were granted on
January 1, 20X5, under this plan. The exercise price of the options
was $25 per share. They vested two years from the grant date. 100%
of the options vested. Citron maintains a separate contributed
surplus account for expired options. Other information about the
ESOP follow:
* The fair value of the ESOP using
an appropriate option-pricing model was $300,000.
*...
Bell Corporation grants an incentive stock option to Peggy, an employee, on January 1, 2019, when...
Bell Corporation grants an incentive stock option to Peggy, an
employee, on January 1, 2019, when the option price and FMV of the
Bell stock is $80.The option entitles Peggy to buy 10 shares of
Bell stock. Peggy exercises the option and acquires the stock on
April 1, 2021, when the stock’s FMV is $100. Peggy, while still
employed by the Bell Corporation, sells the stock on May 1, 2023
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What are the tax consequences to...
Carmichael Co. adopted a stock option plan for its top executives. Under the plan, each option...
Carmichael Co. adopted a stock option
plan for its top executives. Under the plan, each option
granted would allow an executive to
purchase one share of Carmichael’s $10 par value
common stock for $40 per
share.
On January 1, 2020, Carmichael granted the executives 60,000
options. The options were non-transferable and the executive had to
remain an employee of the company to exercise the options. The
options were exercisable within a 2-year period beginning on
January 1, 2022. It is...
Carmichael Co. adopted a stock option plan for its top executives. Under the plan, each option...
Carmichael Co. adopted a stock option plan for its top
executives. Under the plan, each option
granted would allow an executive to purchase one share of
Carmichael’s $10 par value
common stock for $40 per share.
On January 1, 2020, Carmichael granted the executives 60,000
options. The options were non-transferable and the executive had to
remain an employee of the company to exercise the options. The
options were exercisable within a 2-year period beginning on
January 1, 2022. It is...
Under its executive stock option plan, M Corporation granted options on January 1, 2018, that permit...
Under its executive stock option plan, M Corporation granted
options on January 1, 2018, that permit executives to purchase 15
million of the company's $1 par common shares within the next eight
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, $18 per share. The fair value of the options, estimated by
an appropriate option pricing model, is $4 per option. No
forfeitures were...
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