Question
On January 1, 2021, Purple Inc. issued stock options for 200,000 shares to division managers. The options have an estimated fair value of $6 each
On January 1, 2021, Purple Inc. issued stock options for 200,000 shares to division managers. The options have an estimated fair value of $6 each and vest in 3 years subject to conditions. The options are not exercisable unless divisional revenue increases by 6% 3 years. Purple initially estimates that it is probable the goal will be achieved.
Required:
d. At the end of 2023, Purple managers reach their goal of revenue increase. Write the journal entry required for 12/31/2023.
e. Separate from the options above. Purple previously had granted and recognized stock options with a value of $200,000 that were exercised in 2023. The 40,000 stock options had a strike price of $20 and the market price of the common stock on the day of exercise was $28 per share. Record the journal entry to show the exercise of the options.
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