On January 1, 2021, Hugh Morris Comedy Club (HMCC) granted 1 million stock options to key executives
Question:
On January 1, 2021, Hugh Morris Comedy Club (HMCC) granted 1 million stock options to key executives exercisable for 1 million shares of the company’s common stock at $20 per share. The stock options are intended as compensation for the next three years. The options are exercisable within a four-year period beginning January 1, 2024, by the executives still in the employ of the company. No options were terminated during 2021. The market price of the common stock was $25 per share at the date of the grant. HMCC estimated the fair value of the options at $9 each. One percent of the options are forfeited during 2022 due to executive turnover. What amount should HMCC record as compensation expense for the year ended December 31, 2022, assuming HMCC chooses the option to record forfeitures as they actually occur?
Common StockCommon 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...
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Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas