Reference no: EM132615731

Questions -

A) Allied Paper Products, Inc., offers a restricted stock award plan to its vice presidents. On January 1, 2021, the company granted 35 million of its $1 par common shares, subject to forfeiture if employment is terminated within two years. The common shares have a market price of $8 per share on the grant date.

Required -

1. Determine the total compensation cost pertaining to the restricted shares.

2. Prepare the appropriate journal entries related to the restricted stock through December 31, 2022.

Record the compensation expense. 12/31/21

Record the compensation expense. 12/31/22

Record issuance of stock award. 12/21/22

B) Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 52 million $1 par common shares. The exercise price is the market price on the grant date-$8 per share. Options cannot be exercised prior to January 1, 2023, and expire December 31, 2027. The fair value of the 52 million options, estimated by an appropriate option pricing model, is $1 per option.

Required -

1. Determine the total compensation cost pertaining to the incentive stock option plan.

2. to 5. Prepare the appropriate journal entries to record compensation expense on December 31, 2021 and 2022. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share and the entry on December 31, 2027, when the remaining options that have vested expire without being exercised.

Record compensation expense on December 31, 2021.

Record compensation expense on December 31, 2022.

Record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share.

Record expiration of options.