Reference no: EM132608826

Questions -

Q1. On June 30, 2018, Kinshasa Corp. granted stock options for 30,000 of its common shares to key employees, at an option price of $36. On that date, the market price of the common shares was $32. The Black-Scholes option pricing model determined total compensation expense to be $720,000. The options are exercisable beginning January 1, 2021, providing the key employees are still employed by Kinshasa at the time the options are exercised. The options expire on June 30, 2022.

On January 2, 2021, when the market price of the shares was $42, all 30,000 options were exercised.

Find the amount of compensation expense Kinshasa should have recorded for calendar 2020?

Q2. Presented below is information related to Madrid Ltd., a public company which sells shares on a subscription basis:

Subscriptions Receivable, Common Shares $120,000

Common Shares 3,810,000

Common Shares Subscribed 240,000 $4

Preferred Shares 1,440,000

Retained Earnings 900,000

Find the total amount that will be added to the Common Share account if all of the subscriptions are paid in full?