On June 6, Aretha Dafoe received an option to purchase 20,000 shares of Shalom Company $1 par

Question:

On June 6, Aretha Dafoe received an option to purchase 20,000 shares of Shalom Company $1 par value common stock at an option price of $8 per share, which is equal to the market price on that date. The market price of the common stock on the date Dafoe exercises the option is $25 per share. (1) What value must be estimated to determine the expense of the option on June 6? (2) What relevance does the market price per share have when Dafoe later exercises the option?

Common Stock
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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...

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