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Chapter 19 Spiceland 6th edition

Chapter 19 Spiceland 6th edition - Exercise 19-7...

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Exercise 19-7 Requirement 1 At January 1, 2011, the estimated value of the award is: $1 estimated fair value per option x 40 million options granted = $40 million fair value of award Requirement 2 ($ in millions) Compensation expense ($40 million ÷ 2 years) ... 20 Paid-in capital – stock options ................... 20 Requirement 3 Compensation expense ($40 million ÷ 2 years) ... 20 Paid-in capital – stock options ................... 20 Requirement 4 Cash ($8 exercise price x 30 million shares) ........................ 240 Paid-in capital - stock options ( 3 / 4 account balance of $40 million) ................................. 30 Common stock (30 million shares at $1 par per share) .... 30 Paid-in capital – excess of par (remainder) ................... 240 Note: The market price at exercise is irrelevant. Requirement 5 Paid-in capital – stock options ($40 -30 million) ............. 10 Paid-in capital – expiration of stock options ........... 10
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Exercise 19-10 (amounts in thousands, except per share amount) net Earnings income Per Share $655 $655 ———————————————————————— = —— = $.64 900(1.05) + 60 ( 8 / 12 ) (1.05) + 72 ( 7 / 12 ) 1,029 shares new new at Jan. 1 shares shares ___ stock dividend ___ adjustment
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Exercise 19-11 1. EPS in 2011 (amounts in thousands, except per share amount) net Earnings income Per Share $400 $400 —————————————————————————— –––– = $2.00 202 - 6 ( 10 / 12 ) + 6 ( 2 / 12 ) + 24 ( 1 / 12 ) 200 shares treasury treasury shares new at Jan. 1 shares sold shares 2. EPS in 2012 (amounts in thousands, except per share amount) net Earnings income Per Share $400 $400
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