Question
Allied Material Company adopted a stock option plan that granted options to key executives to purchase 100,000 shares of the companys $10.00 par value common
Allied Material Company adopted a stock option plan that granted options to key executives to purchase 100,000 shares of the companys $10.00 par value common stock. The options were granted on January 1, 2020, and were exercisable after December 31, 2022, if the grantee was still an employee of the company. The options expired 4 years from date of grant. The exercise price was set at $70 per share, and the fair value option-pricing model determines the fair value of each option on the date of grant was $33. The companys fiscal year end is December 31.
Half of the options were exercised February 1, 2023, when the market price was $80 a share.
Required:
a) Determine the total compensation expense that will need to be recognized for all of the options combined. Show the calculation.
b) Prepare the journal entry for December 31, 2020 in proper form.
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