Reference no: EM132956020

Questions -

(1) Owl Co. buys 5,000 shares of their own common stock from their shareholders at $25 per share with a $2 per share par value. If Owl uses the more commonly used method, what are the financial statement effects of Fox's entry on this purchase?

A: D L: NE SE: D NI: NE CFs: D

A: D L: NE SE: D NI: D CFs: D

A: D L: I SE: NE NI: NE CFs: D

A: D L: NE SE: D NI: NE CFs: NE

(2) On January 1, 2020, Owl Co. granted 100,000 stock options to buy 100,000, $2 par, common shares. The exercise price equals the $10 market price of the common stock on grant date. The options can be exercised for 10 years after December 31, 2023. Using an option pricing model, Owl values each option at $6 on grant date. In Owl's 12/31/20 adjusting entry, what compensation expense does Owl record for 2020 if 10% forfeitures are expected?

$225,000

$90,000

$108,000

$135,000