View the step-by-step solution to:

Stock options.Prepare the necessary entries from 1/1/10-2/1/12 for the following events using the fair value method. If no entry is needed, write "No...

Stock options.Prepare the necessary entries from 1/1/10-2/1/12 for the following events using the fair value method. If no entry is needed, write "No Entry Necessary."1. On 1/1/10, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 12,000 shares of common stock at $40 per share. The par value is $10 per share.
2. On 2/1/10, options were granted to each of five executives to purchase 12,000 shares. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on 2/1/12. It is assumed that the options were for services performed equally in 2010 and 2011. The Black-Scholes option pricing model determines total compensation expense to be $1,300,000.
3. At 2/1/12, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited.

Top Answer

Dear Student,... View the full answer

CH220310_5215_ACC.docx

Stock Options
Prepare the necessary entries from 1/1/10-2/1/12 for the following events using the fair value
method. If no entry is needed, write "No Entry Necessary."
1. On 1/1/10, the...

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online