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Category > Business & Finance Posted 10 May 2017 My Price 5.00

Stock options

Stock options; exercise

Refer to the situation described in BE 19–3. Suppose that the options are exercised on April 3, 2019, when the market price is $19 per share. Ignoring taxes, what journal entry will National record?

BE 19–3

Stock options

Under its executive stock option plan, National Corporation granted options on January 1, 2016, that permit executives to purchase 12 million of the company’s $1 par common shares within the next six years, but not before December 31, 2018 (the vesting date). The exercise price is the market price of the shares on the date of grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. No forfeitures are anticipated. Ignoring taxes, what is the total compensation cost pertaining to the stock options? What is the effect on earnings in the year after the options are granted to executives?

 

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Alpha Geek
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Status NEW Posted 10 May 2017 06:05 PM My Price 5.00

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Attachments

file 1494440043-1849568_1_636299159445432577_stock-options-exercise.xlsx preview (336 words )
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