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need help on journal enteries JBL. Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share based compensation plans: Under
need help on journal enteries
JBL. Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share based compensation plans: Under its nonqualified stock option plan, JBL granted options to key officers on January 1,2024. - The options permit holders to acquire 6 million of the company's $1 par common shares for $22 within the next six years, but not before January 1,2027 (the vesting date). - The market price of the shares on the date of grant is $26 per share. - The fair value of the 6 million options, estimated by an appropriate option pricing model, is $6 per option - Because the plan does not qualify as an incentive plan, JBL will recelve a tax deduction upon exercise of the options equal to the excess of the market price at exercise over the exercise price. - The tax rate is 25%. Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. Prepare the appropriate journal entries to record compensation expense and its tax effect on December 31, 2024, 2025, and 2026. 3. Record the exercise of the options and their tax effect if all of the options are exercised on August 21, 2028, when the market price is $27 per share Record compensation expense on December 31, 2024. Record any tax effect related to compensation expense recorded in 2024. Record compensation expense on December 31, 2025. Record any tax effect related to compensation expense recorded in 2025. Record compensation expense on December 31, 2026. Record any tax effect related to compensation expense recorded in 2026. Record compensation expense on December 31, 2025. 4 Record any tax effect related to compensation expense recorded in 2025. 5 Record compensation expense on December 31, 2026. 6 Record any tax effect related to compensation expense recorded in 2026. 7 Record the exercise of the options on August 21, 2028 when the market price is $27 per share. 8 Record any tax effect related to the exercise of the options Step by Step Solution
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