Reference no: EM133036577

Questions -

Q1. Lance Chips granted restricted stock units (RSUs) representing 44 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $7 per share on the grant date. The total compensation cost pertaining to the restricted stock units is?

Q2. FX Services granted 16.0 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within two years. The common shares have a market price of $9 per share on the grant date. Ignoring taxes, what is the effect on earnings in the year after the shares are granted to executives?

Q3. On January 1, 2021, M Company granted 98,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2023, and expire on January 1, 2027. Each option can be exercised to acquire one share of $1 par common stock for $11. An option-pricing model estimates the fair value of the options to be $4 on the date of grant. What amount should M recognize as compensation expense for 2021?

Q4. Under its executive stock option plan, N Corporation granted options on January 1, 2021, that permit executives to purchase 11.0 million of the company's $1 par common shares within the next eight years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $18 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. Ignoring taxes, what is the effect on earnings in the year after the options are granted to executives?

Q5. Pastore Inc. granted options for 1 million shares of its $1 par common stock at the beginning of the current year. The exercise price is $28 per share, which was also the market value of the stock on the grant date. The fair value of the options was estimated at $7.00 per option. What would be the total compensation indicated by these options?

Q6. Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2021, options were granted for 84,000 $1 par common shares. The exercise price equals the $3 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. What is the total compensation cost for this plan?

Q7. To encourage employee ownership of the company's common shares, KL Corp. permits any of its employees to buy shares directly from the company through payroll deduction. There are no brokerage fees and shares can be purchased at a 8% discount. During May, employees purchased 16,000 shares at a time when the market price of the shares on the New York Stock Exchange was $16 per share. KL will record compensation expense associated with the May purchases of?

Q8. Martin Corp. permits any of its employees to buy shares directly from the company through payroll deduction. There are no brokerage fees and shares can be purchased at a 10% discount. During 2021, employees purchased 20 million shares; during this same period, the shares had a market price of $16 per share at the end of the year. Martin's 2021 pretax earnings will be reduced by?

Q9. The Peach Corporation provides restricted stock to certain executives. Under the plan, the company granted 30 million shares on January 1, 2021, which vest in four years. The fair value of the shares is $14.6. No forfeitures are anticipated. Ignore taxes.

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

2. Prepare the appropriate journal entries (if any).

Q10.Fully vested incentive stock options for 95,000 shares of common stock at an exercise price of $45 were outstanding for the entire year. The market price of the stock during the year averaged $51.

Required - By how many shares will the assumed exercise of these options increase the weighted-average number of shares outstanding when calculating diluted earnings per share?