Question
26. On January 1, 2021, Dorie Company granted an employee an option to purchase 30,000 shares of Dorie's P5 par value common stock at P20
26. On January 1, 2021, Dorie Company granted an employee an option to purchase 30,000 shares of Dorie's P5 par value common stock at P20 per share.The option became exercisable on December 31, 2022, after the employee completed two years of service.The option was exercised on January 15, 2023.The market prices of stock were as follows:
January 1, 2021 30
December 31, 2021 50
January 15, 2023 45
For 2021, Dorie should recognize compensation expense of
a. 450,000
b. 375,000
c. 150,000
d. 0
27. On January 1, 2021, ABC Company offered its chief executive officer, stock appreciation rights with the following terms:
Predetermined price P100 per share
Number of shares 10,000 shares
Service period - 3 years 2021,2022and 2023
Exercise date December 31, 2023
The stock appreciation rights are exercised on December 31, 2023.The quoted price of the ABC stock is as follows: P118 on December 31, 2021, P112 on December 31, 2022, and P124 on December 31, 2023.
ABC Company should record 2023 compensation expense at
a. 160,000
b. 60,000
c. 80,000
d. 20,000
29. On January 1, 2021, Oak Company granted stock options to certain key employees as additional compensation.The options were for 100,000 shares of Oak's P2 par value common stock at an option price of P15 per share.Market price of stock on January 1, 2021, was P20 per share.The fair value of each stock option on January 1, 2021 is P8.The options were exercisable beginning January 1, 2021 and expire on December 31, 2022.On April 1, 2021, when Oak's stock was trading at P21 per share, all the options were exercised.
What amount of compensation should Oak report in 2021 in connection with the options?
a. 800,000
b. 500,000
c. 250,000
d. 400,000
30. Janae Corporation has outstanding 10,000 shares of 10 par value ordinary shares and retained earnings of 500,000. If Janae declares a 2-for-1 share split when the fair value of the shares is 85 per share, the entry includes:
a. A debit to Retained Earnings for 10,000.
b. A credit to Share PremiumOrdinary for 75,000.
c. A debit to cash for 85,000.
d. No entry is required for a share split.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started