options are exercisable beginning January 1 2010 provided those key employees

Options are exercisable beginning january 1 2010

  • Notes
  • BailiffBookSalamander9487
  • 14
  • 95% (65) 62 out of 65 people found this document helpful

This preview shows page 7 - 9 out of 14 pages.

options are exercisable beginning January 1, 2010, provided those key employees are still in Weiser’s employ at the time the options are exercised. The options expire on January 1, 2011. On January 1, 2010, when the market price of the stock was $29 per share, all 40,000 options were exercised. The amount of compensation expense Weiser should record for 2009 under the fair value method is c. $80,000. 71. On December 31, 2010, Houser Company granted some of its executives options to purchase 45,000 shares of the company's $50 par common stock at an option price of $60 per share. The Black-Scholes option pricing model determines total compensation expense to be $900,000. The options become exercisable on January 1, 2011, and represent compensation for executives' past and future services over a three-year period beginning January 1, 2011. What is the impact on Houser's total stockholders' equity for the year ended December 31, 2010, as a result of this transaction under the fair value method? c. $0 72. On June 30, 2008, Norman Corporation granted compensatory stock options for 30,000 shares of its $20 par value common stock to certain of its key employees. The market price of the common stock on that date was $36 per share and the option price was $30. The Black-Scholes option pricing model determines total compensation expense to be $360,000. The options are exercisable beginning January 1, 2011, provided those key employees are still in Norman’s employ at the time the options are exercised. The options expire on June 30, 2012. On January 4, 2011, when the market price of the stock was $42 per share, all 30,000 options were exercised. What should be the amount of compensation expense recorded by Norman Corporation for the calendar year 2010 using the fair value method? b. $144,000. 73. In order to retain certain key executives, Jensen Corporation granted them incentive stock options on December 31, 2009. 50,000 options were granted at an option price of $35 per share. Market prices of the stock were as follows: December 31, 2010 $46 per share December 31, 2011 51 per share The options were granted as compensation for executives' services to be rendered over a two-year period beginning January 1, 2010. The Black-Scholes option pricing model determines total compensation expense to be $500,000. What amount of compensation expense should Jensen recognize as a result of this plan for the year ended December 31, 2010 under the fair value method?
Image of page 7
a. $250,000. 74. Grant, Inc. had 40,000 shares of treasury stock ($10 par value) at December 31, 2010, which it acquired at $11 per share. On June 4, 2011, Grant issued 20,000 treasury shares to employees who exercised options under Grant's employee stock option plan. The market value per share was $13 at December 31, 2010, $15 at June 4, 2011, and $18 at December 31, 2011. The stock options had been granted for $12 per share. The cost method is used. What is the balance of the treasury stock on Grant's balance sheet at December 31, 2011?
Image of page 8
Image of page 9

You've reached the end of your free preview.

Want to read all 14 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes