Reference no: EM133044213
Question - On January 1, 2018, Jerome Company granted 100 share options each, to 500 employees, conditional upon the employee's remaining in the company during the vesting period. The share options vest at the end of the three-year period. On grant date, each share option has a fair value of 30. The par value is 100 and the option price is 120.
On December 31, 2019, 30 employees have left and it is expected that on the basis of weighted average probability, a further 30 employees will leave before the end of the three year period. On December 31, 2020, only 20 employees actually left and all the share options are exercise on that date.
Required -
1. How much is the compensation expense that should be recognized for the year 2018?
a. 500,000
b. 880,000
c. 380,000
d. 470,000
2. How much is the compensation expense that should be recognized for the year 2019?
a. 500,000
b. 880,000
c. 380,000
d. 470,000
3. How much is the compensation expense that should be recognized for the year 2020?
a. 500,000
b. 880,000
c. 380,000
d. 470,000
4. On January 1, 2020, Kimberly Company granted Angel, its president, 20,000 stock appreciation rights for past services. These rights are exercisable immediately and expire on January 1, 2022. On exercise, Angel is entitled to receive cash for the excess of the stock's market price on the exercise date over the market price on the grant date. Angel did not exercise any of the rights during 2020. The market price of Kimberly's stock was P30 on January 1, 2020 and P45 on December 31, 2020. As a result of the stock appreciation rights,
Kimberly should recognize compensation expense for 2020 of
a. 0
b. 100,000
c. 300,000
d. 600,000