On January 1, 2024, Jingrong Corporation granted stock options to key employees for the purchase of 81,000 shares of the company's common stock at $28 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2026, by the grantees still in the employ of the company. No options were terminated during 2024, but the company does have an experience of 6% forfeitures over the life of the stock options. The market price of the common stock was $34 per share at the date of the grant. Jingrong Corporation used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Jingrong charge to compensation expense for the year ended December 31, 2024?

On January 1, 2024, Jingrong Corporation granted stock options to key employees for the purchase of 81,000 shares of the company's common stock at $28 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2026, by the grantees still in the employ of the company. No options were terminated during 2024, but the company does have an experience of 6% forfeitures over the life of the stock options. The market price of the common stock was $34 per share at the date of the grant. Jingrong Corporation used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Jingrong charge to compensation expense for the year ended December 31, 2024?

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

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 8RE: On January 2, 2019, Brust Corporation grants its new CFO 2,000 restricted share units. Each of the...

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On January 2, 2019, Brust Corporation grants its new CFO 2,000 restricted share units. Each of the time-vested restricted share units entitles the CFO to receive one share of Brust common stock if she remains an employee of the company for 4 years. On January 2, 2019, shares of Brusts 1 par value common are trading at 29.50 per share. The company estimates that the CFO will complete all 4 years of required service with the company. Prepare the journal that Brust should make each year to account for the restricted share units.
On January 1, 2024, Jingrong Corporation granted stock options to key employees for the purchase of 81,000 shares of the company's common stock at $28 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2026, by the grantees still in the employ of the company. No options were terminated during 2024, but the company does have an experience of 6% forfeitures over the life of the stock options. The market price of the common stock was $34 per share at the date of the grant. Jingrong Corporation used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Jingrong charge to compensation expense for the year ended December 31, 2024? Multiple Choice $405,000 $810,000 $380,700 $761,400
On January 1, 2024, Wendy Day Company granted stock options to key executives exercisable for 500,000 shares of the company's common stock at $18 per share. The stock options are intended as compensation for the next four years. The options are exercisable within a four-year period beginning January 1, 2028, by the executives still in the employ of the company. No options were terminated during 2024, but the company anticipates 5% forfeitures over the life of the stock options. The market price of the common stock was $18 per share at the date of the grant. Wendy Day estimated the fair value of the options at $4 each. 1% of the options are forfeited during 2025 due to executive turnover. What amount should Wendy Day record as compensation expense for the year ended December 31, 2025, assuming the company chooses to estimate forfeitures? Multiple Choice $475,000 $495,000 $500,000 $520,000
On January 1, 2024, Felix Austead Athletic Club (FAAC) granted stock options to key executives exercisable for 500,000 shares of the company’s common stock at $18 per share. The stock options are intended as compensation for the next four years. The options are exercisable within a four-year period beginning January 1, 2028, by the executives still in the employ of the company. No options were terminated during 2024, but the company anticipates 5% forfeitures over the life of the stock options. The market price of the common stock was $18 per share at the date of the grant. FAAC estimated the fair value of the options at $4 each. 1% of the options are forfeited during 2025 due to executive turnover. What amount should FAAC record as compensation expense for the year ended December 31, 2025, assuming FAAC chooses the option not to estimate forfeitures?
On January 1, 2018, Hugh Morris Comedy Club (HMCC) granted 1 million stock options to key executivesexercisable for 1 million shares of the company’s common stock at $20 per share. The stock options are intendedas compensation for the next three years. The options are exercisable within a four-year period beginningJanuary 1, 2021, by the executives still in the employ of the company. No options were terminated during 2018.The market price of the common stock was $25 per share at the date of the grant. HMCC estimated the fair valueof the options at $9 each. 1% of the options are forfeited during 2019 due to executive turnover. What amountshould HMCC record as compensation expense for the year ended December 31, 2019, assuming HMCCchooses the option to record forfeitures as they actually occur?
On the first day of 2021, Northrop granted stock options to key employees for the purchase of 86,000 shares of the company's common stock at $27 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2023, by the grantees still in the employ of the company. No options were terminated during 2021, but the company does have an experience of 6% forfeitures over the life of the stock options. The market price of the common stock was $33 per share at the date of the grant. Northrop used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Northrop charge to compensation expense for the year ended December 31, 2021? Multiple Choice $430,000. $404,200. $808,400.
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On January 1, 2016, Pall Corp. granted stock options to key employees for the purchase of 40,000 shares of the company’s common stock at $25 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2018, by the grantees still in the employ of the company. No options were terminated during 2016, but the company does have an experience of 4% forfeitures over the life of the stock options. The market price of the common stock was $32 per share at the date of the grant. Pall Corp. used the binomial pricing model and estimated the fair value of each of the options at $10. What amount should Pall charge to compensation expense for the year ended December 31, 2016? a. $153,600 b. $160,000 c. $192,000 d. $200,000
Date May 1, 2028 Account Titles and Explanation Debit Credit
On November 1, 2019, Sheridan Corp. adopted a stock option plan that granted options to key executives to purchase 42,300 common shares. The options were granted on January 2, 2020, and were exercisable two years after the date of grant if the grantee was still a company employee; the options expire six years from the date of grant. The option price was set at $39, and total compensation expense was estimated to be $541,000. Note that the calculation did not take forfeitures into account. On April 1, 2021, 3,300 options were terminated when some employees resigned from the company. The fair value of the shares at that date was $26. All of the remaining options were exercised during the year 2022: 29,600 on January 3 when the fair value was $49, and 9,400 on May 1 when the fair value was $55 a share. Assume that the entity follows ASPE and has chosen not to reflect forfeitures in its upfront estimate of compensation expense. (a) Prepare journal entries relating to the stock option plan…
19.On January 1, 2021, Teledyne Technologies granted stock options to key employees for the purchase of 85,000 shares of the company's common stock at $29 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2023, by the grantees still in the employ of the company. No options were terminated during 2021, but the company does have an experience of 4% forfeitures over the life of the stock options. The market price of the common stock was $35 per share at the date of the grant. Teledyne used the Binomial pricing model and estimated the fair value of each of the options at $11. What amount should Teledyne charge to compensation expense for the year ended December 31, 2021? Multiple Choice $897,600. $467,500. $935,000. $448,800.