On January 1, 2008, Titania Inc. granted stock options to officers and key employees for the purchase
Question:
On January 1, 2008, Titania Inc. granted stock options to officers and key employees for the purchase of 20,000 shares of the company’s $10 par common stock at $25 per share. The options were exercisable within a 5-year period beginning January 1, 2010, by grantees still in the employ of the company, and expiring December 31, 2014. The service period for this award is 2 years.
Assume that the fair value option-pricing model determines total compensation expense to be $350,000. On April 1, 2009, 2,000 option shares were terminated when the employees resigned from the company. The market value of the common stock was $35 per share on this date.
On March 31, 2010, 12,000 option shares were exercised when the market value of the common stock was $40 per share.
Instructions
Prepare journal entries using the fair value method to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2008, 2009, and 2010.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Step by Step Answer:
1108 No entry 123108 Compensation Expense 175000 Paidin Capital x St...View the full answer
Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso
