Determine the total compensation cost

Assignment Help Financial Accounting
Reference no: EM132966401

Problem - Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2021, options were granted for 60,000 $1 par common shares. The exercise price equals the $5 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2024, and expire December 31, 2025. Each option has a fair value of $1 based on an option pricing model.

(1) Determine the total compensation cost pertaining to the options. Show calculations.

(2) Prepare the appropriate journal entry to record compensation expense for the year 2021.

(3) 54,000 shares of options are exercised on April 15, 2024. The market price is $8 per share. Prepare the appropriate journal entry to record this transaction.

Reference no: EM132966401

Questions Cloud

What is importance of effective working capital management : What is the importance of effective working capital management? Its role in meeting the firm's strategic objectives, and its effect in value creation
Discuss what you plan to do with this new knowledge : Reflective practice is a process of thinking about new experiences with a view of learning. It is a form of personal response to new experiences
Describe a real-world example of an organization : Do you think organizations differ from each other when placing importance on areas of the SWOT analysis?
What is mcgonnigal degree of operating leverage at a sales : McGonnigal Inc. has expected sales of $45 million. What is McGonnigal's degree of operating leverage at a sales level of $45 million?
Determine the total compensation cost : Each option has a fair value of $1 based on an option pricing model. Determine the total compensation cost pertaining to the options
Social media usage in recruitment or selection : -What is your personal opinion about the usage of Social Media in candidate screening tool? Argue either for or against its usage?
How much gibson must reduce debt in year two : How much Gibson must reduce its debt in Year 2. The firm is planning to purchase additional labor-saving equipment, which will increase fixed costs by $150,000
What is stratergic capabilities : what is "stratergic capabilities" and important to an organization. please add examples
Define the possibility of increasing minimum wage : Define "The Possibility of Increasing Minimum Wage" as threat for SWOT. (1 RESOURCES NEEDED)

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd