Answered: Wilson's compensation expense in 2021…

Business

Accounting

Wilson's compensation expense in 2021 for these stock options was: $800 million. $200 million. $400 million. $0.

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 7RE: On January 1, 2019, Phoenix Corporation adopts a performance-based share option plan for 25...

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On January 1, 2019, Phoenix Corporation adopts a performance-based share option plan for 25 executives, with the number of shares based on the yearly increase in sales. At the end of 2019, based on a 10% increase in sales, it expects that each executive will be granted 150 options and that the fair value of an option expected to vest is 15.75. Phoenix expects a turnover rate of 15% over the 3-year service period. Determine the compensation expense for 2019 for this plan.
Cheng/Hamm Incorporated developed a business strategy that uses stock options as a major compensation incentive for its top executives. On January 1, 2024, 23 million options were granted, each giving the executive owning them the right to acquire five $1 par common shares. The exercise price is the market price on the grant date – $30 per share ($150 per option). Options vest on January 1, 2028. They cannot be exercised before that date and will expire on December 31, 2030. The fair value of the 23 million options, estimated by an appropriate option pricing model, is $49 per option. Ignore income tax. Cheng/Hamm's compensation expense in 2024 for these stock options was: Note: Round your answer to nearest whole dollar amount.
Wilson Inc. developed a business strategy that uses stock options as a major compensation incentive for its top executives. • On January 1, 2018, 20 million options were granted, each giving the executive owning them the right to acquire six $1 par common shares. • The exercise price is the market price on the grant date-$10 per share. • Options vest on January 1, 2022. They cannot be exercised before that date and will expire on December 31, 2024. • The fair value of the 20 million options, estimated by an appropriate option pricing model, is $40 per option. Ignore income tax. On March 1, 2022, when the market price of Wilson's stock was $14 per share, 3 million of the options were exercised. The journal entry to record this would include: A debit to paid-in capital-stock options for $120 million All of these answer choices are correct A credit to common stock for $75 million A credit to paid-in capital-excess of par for $255 million
Union Pacific Corp uses stock options as a major compensation incentive for its top executives. On January 1, 2021, 23 million options were granted, each giving the executive owning them the right to acquire five $1 par common shares. The exercise price is the market price on the grant date – $30 per share ($120 per option). Options vest on January 1, 2025. They cannot be exercised before that date and will expire on December 31, 2027. The fair value of the 23 million options, estimated by an appropriate option pricing model, is $43 per option. Ignore income tax. Union Pacific Corp's compensation expense in 2021 for these stock options was: (Round your answer to nearest whole dollar amount.) Multiple Choice $247 million. $989 million. $494 million. $0.
In order to retain certain key executives, Wildhorse Corporation granted them incentive stock options on December 31, 2024. A total of 152000 options were granted at an option price of $35 per share. Market prices of the stock were as follows: December 31, 2025 December 31, 2026 The options were granted as compensation for executives' services to be rendered over a two-year period beginning January 1, 2025. The Black-Scholes option-pricing model determined total compensation expense to be $1501000. $44 per share 49 per share What amount of compensation expense should Wildhorse recognize as a result of this plan for the year ended December 31, 2025 under the fair value method? O $750500 $1653000 $1501000 $2622950
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, 2024, that permit executives to acquire 4 million of the company’s $1 par common shares within the next five years, but not before December 31, 2025 (the vesting date). The exercise price is the market price of the shares on the date of grant, $14 per share. The fair value of the 4 million options, estimated by an appropriate option pricing model, is $3 per option. No forfeitures are anticipated. Ignore taxes. Required: Determine the total compensation cost pertaining to the options. Prepare the appropriate journal entry to record the award of options on January 1, 2024. Prepare the appropriate journal entry to record compensation expense on December 31, 2024. Prepare the appropriate journal entry to record compensation expense on December 31, 2025.
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 23 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, $9.00 per share. The fair value of the 23 million options, estimated by an appropriate option pricing model, is $2 per option. No forfeitures are anticipated. Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the options.2. Prepare the appropriate journal entry to record the award of options on January 1, 2021.3. Prepare the appropriate journal entry to record compensation expense on December 31, 2021.4. Prepare the appropriate journal entry to record compensation expense on December 31, 2022.
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 4 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, $14 per share. The fair value of the 4 million options, estimated by an appropriate option pricing model, is $3 per option. No forfeitures are anticipated. Ignore taxes.Required:1. Determine the total compensation cost pertaining to the options.2. Prepare the appropriate journal entry to record the award of options on January 1, 2021. 3. Prepare the appropriate journal entry to record compensation expense on December 31, 2021.4. Prepare the appropriate journal entry to record compensation expense on December 31, 2022.
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, 2024, that permit executives to acquire 18 million of the company's $1 par common shares within the next five years, but not before December 31, 2025 (the vesting date). • The exercise price is the market price of the shares on the date of grant, $31.00 per share. The fair value of the 18 million options, estimated by an appropriate option pricing model, is $7 per option. • No forfeitures are anticipated. • Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the options. 2. Prepare the appropriate journal entry to record the award of options on January 1, 2024. 3. Prepare the appropriate journal entry to record compensation expense on December 31, 2024. 4. Prepare the appropriate journal entry to record compensation expense on December 31, 2025. Complete this question by entering…
Hua Xin Services offered an incentive stock option plan to its employees. On January 1, 2024, options were granted for 90,000 $1 par common shares. The exercise price equals the $5 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2027, and expire December 31, 2028. Each option has a fair value of $1 based on an option pricing model. What is the total compensation cost for this plan?
On January 1, 2024, Sherwood Company granted 97,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2026, and expire on January 1, 2030. Each option can be exercised to acquire one share of $1 par common stock for $8. An option-pricing model estimates the fair value of the options to be $3 on the date of grant. If unexpected turnover in 2025 caused the company to estimate that 15% of the options would be forfeited, what amount should Sherwood recognize as compensation expense for 2025?
On January 1, 2021, Farmer Fabrication issued stock options for 280,000 shares to a division manager. The options have an estimated fair value of $5 each. To provide additional incentive for managerial achievement, the options are not exercisable unless Farmer Fabrication’s stock price increases by 2% in three years. Farmer initially estimates that it is not probable the goal will be achieved. How much compensation will be recorded in 2021, 2022, and 2023?