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Unformatted text preview: Total compensation expense 50,000 ($5*10000) Annual compensation expense 25,000 ($5*10000/2) Issuance of options & first year DR CR 4/1/2005 No entry 12/31/2005 Compensation expense 18,750 (25000*9/12) Paid-in capital - stock options 18,750 In late 2004, Huff Corporation approved a new employee stock option plan. On April 1, 2005, the Company granted options to Bob Baskin to purchase 10,000 shares of Huff $1 par common stock for an exercise price of $15 / share. The options do not vest until the second anniversary date and expire on April 1, 2015 unless Baskin's employment is terminated at an earlier date.. Using an option pricing model, managment estimates that the options' fair value were $5 per share on the grant date while Huff's common stock was trading at $15 on that date. Exercise on 6/30/12 DR CR 6/30/2012 Cash 90,000 ($15*6000) Paid-in capital - stock options 30,000 ($5*6000) Common stock 6,000 (6000*1) APIC 114,000 plug (or $15 + $5 - $1) In late 2004, Huff Corporation approved a new employee stock option plan. In late 2004, Huff Corporation approved a new employee stock option plan....
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This note was uploaded on 12/14/2011 for the course AC 100 taught by Professor Strickland during the Spring '11 term at Alabama.
- Spring '11