On 5/31/2022 Grant options, that vest in 36 months, to officers to buy 50,000 common shares for $18 each (current MV $18) over a an 8-year exercise period, valued at $450,000 using Black-Scholes pricing model. Average 2022 CS MV is $20. What would the journal entry be for 2022?
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On 5/31/2022 Grant options, that vest in 36 months, to officers to buy 50,000 common shares for $18 each (current MV $18) over a an 8-year exercise period, valued at $450,000 using Black-Scholes pricing model. Average 2022 CS MV is $20.
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- "TSLA price is currently at $440. You just bought 5 contracts of at-the-money straddle at strike (K) of $440 and expiry in Dec 2020 for a price of $110. What will be the payoff at expiry to your straddle position if the TSLA price at expiry is (i) $200 (ii) $450 and (iii) $1000 . 1 contract is 100 shares. Answer in integers."Fortune Brands granted options on January 1, 2024, that allows the recipient to purchase 15.0 million of the company's $1 par common shares within the next eight years, but not before December 31, 2026 (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 $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? Note: Round your answer to 1 decimal place. Multiple Choice O $60.0 million $90.0 million $0 $20.0 millionBig-Funds Ltd. granted stock options to executives in early 2022. The stock options vest over four years and expire after six years. In total, the options allow the purchase of 40,000 shares at $10 per share. Option pricing models indicate that the options have a total fair value of $600,000. Estimates of retention are 80% at the end of 2022 and 75% at the end of 2023. Required: a) Provide the journal entries to be recorded with respect to the options at the end of 2022 and 2023. b) What would the balance be in the equity account for stock options at the end of the forth year if retention remained at 70%? c) Assume that actual retention was 70%, and the options were exercised at the end of the fourth year when the market price of common shares is $25. Provide the entry for exercise. d) Assume that retention was 70% but the options were allowed to lapse after six years when the price of common shares is $4. Provide the entry for the lapse.
- LCI Cable Company grants 1 million performance stock options to key executives at January 1, 2018. Theoptions entitle executives to receive 1 million of LCI $1 par common shares, subject to the achievement ofspecific financial goals over the next four years. Attainment of these goals is considered probable initially andthroughout the service period. The options have a current fair value of $12 per option.Required:1. Prepare the appropriate entry when the options are awarded on January 1, 2018.2. Prepare the appropriate entries on December 31 of each year 2018–2021.3. Suppose at the beginning of 2020, LCI decided it is not probable that the performance objectives will be met.Prepare the appropriate entries on December 31 of 2020 and 2021.Options were granted on January 1, 2023by Paltel Co. to purchase 15,000 common shares at an exercise price of $22. The average market price of Paltel's common stock during 2023 was $30 per share. Calculate the incremental shares (denominator) for these options on December 31, 2023. (When writing your answer, do not use commas (,) or the dollar sign ($). For example, if your answer is $10,000 write it as 10000). Answer:Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2018,options were granted for 40 million $1 par common shares. The exercise price is the market price on the grantdate—$8 per share. Options cannot be exercised prior to January 1, 2020, and expire December 31, 2024. The fairvalue of the 40 million options, estimated by an appropriate option pricing model, is $1 per option.Required:1. Determine the total compensation cost pertaining to the incentive stock option plan.2. Prepare the appropriate journal entry to record compensation expense on December 31, 2018.3. Prepare the appropriate journal entry to record compensation expense on December 31, 2019.4. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2020, whenthe market price is $9 per share.5. Prepare the appropriate journal entry on December 31, 2024, when the remaining options that have vestedexpire without being exercised.
- You purchase one MBI July 120 call contract (equaling 100 shares) for a premium of $5. You hold the option until the expiration date, when MBI stock sells for $123 per share. You will realize _____ on the investment. (Answer in $)Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 40 million $1 par common shares. The exercise price is the market price on the grant date—$8 per share. Options cannot be exercised prior to January 1, 2023, and expire December 31, 2027. The fair value of the 40 million options, estimated by an appropriate option pricing model, is $1 per option.Required:1. Determine the total compensation cost pertaining to the incentive stock option plan.2. Prepare the appropriate journal entry to record compensation expense on December 31, 2021.3. Prepare the appropriate journal entry to record compensation expense on December 31, 2022.4. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share.5. Prepare the appropriate journal entry on December 31, 2027, when the remaining options that have vested expire without being exercised.Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 72 million $1 par common shares. The exercise price is the market price on the grant date—$8 per share. Options cannot be exercised prior to January 1, 2023, and expire December 31, 2027. The fair value of the 72 million options, estimated by an appropriate option pricing model, is $1 per option. Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan.2. to 5. Prepare the appropriate journal entries to record compensation expense on December 31, 2021 and 2022. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share and the entry on December 31, 2027, when the remaining options that have vested expire without being exercised.
- Assume that Amazon.com has a stock-option plan for top management. Each stock option represents the right to purchase a share of Amazon $1 par value common stock in the future at a price equal to the fair value of the stock at the date of the grant. Amazon has 5,000 stock options outstanding, which were granted at the beginning of 2020. The following data relate to the option grant. Exercise price for options 1$40 Market price at grant date (January 1, 2020) 1$40 Fair value of options at grant date (January 1, 2020) 1$6 Service period 15 years Instructions a. Prepare the journal entry(ies) for the first year of the stock-option plan. b. Prepare the journal entry(ies) for the first year of the plan assuming that, rather than options, 700 shares of restricted stock were granted at the beginning of 2020. c. Now assume that the market price of Amazon stock on the grant date was $45 per share. Repeat the requirements for (a) and (b). d. Amazon would like to…Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 40 million $1 par common shares. The exercise price is the market price on the grant date-$8 per share. Options cannot be exercised prior to January 1, 2023, and expire December 31, 2027. The fair value of the 40 million options, estimated by an appropriate option pricing model, is $1 per option. Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. to 5. Prepare the appropriate journal entries to record compensation expense on December 31, 2021 and 2022. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share and the entry on December 31, 2027, when the remaining options that have vested expire without being exercised. Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 5 Prepare the…Assume we are in July, 2023. In July of 2023, the share prices of company B are $80 per share. You believe they should be $30 per share, and are thus overvalued. December 2023 put options on a strike price of $60 per share are currently valued at $5. Each put contract is based on 100 shares. a.) What is your net dollar profit or loss as a holder of the put contract (based ona contract size of 100 shares) if we arrive at expiry in December and you are wrong and Company B shares are selling for $100?