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I need help with all parts of this question, thank you! Buff McGuff, Inc. decided to provide stock options to top management. The stock options
I need help with all parts of this question, thank you!
Buff McGuff, Inc. decided to provide stock options to top management. The stock options will allow management employees to purchase 16,000 shares of common stock during a three year exercise period, following a five year vesting period that begins on the grant date, January 1, 2011. The stock options have an exercise price of $60 per share, which is the market price of Buff McGuff, Inc.'s common stock on the grant date. The fair value of the stock options at the grant date is $15 per share and the fair value of the stock options at December 31, 2011 is $17 per share. As of December 31, 2014, the fair value of the stock options as of the end of the vesting period (December 31, 2015) is estimated to be $20 per share. NOTE: Buff McGuff, Inc.'s common stock has a par value of $5 per share. Required: a) What is the journal entry that Buff McGuff should record on December 31, 2011? b) Assuming 8% of the stock options are forfeited during 2014, what is the journal entry that Buff McGuff should record on December 31, 2014? c) What is the journal entry that Buff McGuff should record when the stock options are exercised? d) WHAT IF this stock compensation plan is for stock appreciation rights (SARs) that will pay the stock appreciation amount in cash at the vesting date? Assuming the fair value of the stock appreciation rights over time is the same as the fair value of the stock options, what is the journal entry that Buff McGuff should record on December 31, 2011? e) Assuming 8% of the stock appreciation rights are forfeited during 2014, what are the two journal entries that Buff McGuff should record on the vesting date, December 31, 2015? f) WHAT IF this stock compensation plan is for restricted stock (FASB refers to it as nonvested shares until the vesting date, at which time it becomes restricted) that is given to the employees on the vesting date with an exercise price of $0? What is the journal entry that Buff McGuff should record on December 31, 2011? g) Assuming 8% of the restricted stock is forfeited during 2014, what are the two journal entries that Buff McGuff should record on the vesting date, December 31, 2015Step by Step Solution
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