- •99. What is the entry to record the expiration of 10% of the options on December 31, 20010?
- •118. Gear Corporation had the following common stock record during the current calendar year:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •137. On January 1, 2006, Shamu Corporation had 100,000 shares of common stock outstanding. The following transactions occurred during 2006:
- •Required:
- •Required:
- •Required:
- •Required:
- •In its 2004 Annual Report to shareholders, Comfort Stores disclosed the following footnote about its eps:
- •163. What is restricted stock? Describe how compensation expense is determined and recorded for a restricted stock plan.
Required:
-
Determine the total compensation cost from these restricted shares.
-
Prepare the appropriate journal entry to record the award on January 1, 2006.
-
Prepare the appropriate journal entry to record compensation expense on December 31, 2006.
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Suppose a 15% forfeiture rate was expected prior to vesting. Determine the total compensation cost, assuming the company follows the fair value approach and chooses to anticipate forfeitures at the grant date.
Answer:
($ in millions)
(1.) $20 x 2 shares = $40
(2.) No Entry
-
(3.)
Compensation expense ($40/4 yrs)
10
Paid-in capital restricted stock
10
(4.) $20 x 2 shares x 85% = $34
Learning Objective: 1 Level of Learning: 3
127. Olde Corporation provides an executive stock option plan. Under the plan, the company granted options on January 1, 2006, that permit executives to acquire 2 million of the company's $1 par value common shares within the next five years, but not before December 31, 2007 (the vesting date). The exercise price is the market price of the shares on the date of the grant, $14 per share. The fair value of the options, estimated by an appropriate option pricing model, is $2 per option. No forfeitures are anticipated. Ignore taxes.
Required:
-
Determine the total compensation cost pertaining to the options, assuming the fair value approach has been selected.
-
Prepare the appropriate journal entry to record the award of the options on January 1, 2006.
-
Prepare the journal entry to record compensation expense on December 31, 2006.
-
Prepare the journal entry to record compensation expense on December 31, 2007.
Answer:
($ in millions)
(1.) $2 x 2 shares = $4
(2.) NO ENTRY
-
(3.)
Compensation expense ($4/2yrs.)
2
Paid-in capital stock options
2
(4.)
Compensation expense ($4/2yrs.)
2
Paid-in capital stock options
2
Learning Objective: 2 Level of Learning: 3
128. The Burford Corporation provides an executive stock option plan. Under the plan, the company granted options on January 1, 2006, that permit executives to acquire 12 million of the company's $1 par value common shares within the next five years, but not before December 31, 2009 (the vesting date). The exercise price is the market price of the shares on the date of the grant, $14 per share. The fair value of the options, estimated by an appropriate model, is $3 per option. No forfeitures are anticipated. Ignore taxes.