On January 1, 2021, Red Lake Corporation issued stock options for its common shares to executive officers. The options are exercisable beginning on January 1, 2023, provided the executive officers are still employed by Red Lake at the time the options are exercised. On June 15, 2025, 3 quarters of the stock options were exercised. The remainder of the options expired on December 31, 2026. Other information pertaining to the stock option plan follows: Total compensation according to a fair value options pricing model $ 845,000 Total number of shares that could be purchased with the stock options 65,000 Option price per share $ 27 Market price of Red Lake common shares on January 1, 2021 $ 27 Market price of Red Lake common shares on June 15, 2025 $ 37 Assume that Red Lake Corporation follows ASPE, and opts to account for employee stock option forfeitures as they occur. Required: 1. What type of stock option plan has been granted? Explain your rationale. (3 marks) 2. Prepare all journal entries required for the stock option plan for the 2021 year to the 2026 year. Assume that Red Lake Corporation has a December 31 year end. (6 marks) - Stock Options On January 1, 2021, Red Lake Corporation issued stock options for its common sharesto executive officers. The options are exercisable beginning on January 1, 2023, provided the executive officers are still employed by Red Lake at the time the options are exercised on June 15, 2025, 3 quarters of the stock options were exercised. The remainder of the options expired on December 31, 2026. Other information pertaining to the stock option plan follows: $ 845,000 Total compensation according to a fair value options pricing model Total number of shares that could be purchased with the stock options Option price per share Market price of Red Lake common shares on January 1, 2021 Market price of Red Lake common shares on June 15, 2025 $ $ 65,000 27 27 37 Assume that Red Lake Corporation follows ASPE, and opts to account for employee stock option forfeitures as they occur. Required: 1. What type of stock option plan has been granted? Explain your rationale. (3 marks) 2. Prepare all journal entries required for the stock option plan for the 2021 year to the 2026 year. Assume that Red Lake Corporation has a December 31 year end. (6 marks) On January 1, 2021, Red Lake Corporation issued stock options for its common shares to executive officers. The options are exercisable beginning on January 1, 2023, provided the executive officers are still employed by Red Lake at the time the options are exercised. On June 15, 2025, 3 quarters of the stock options were exercised. The remainder of the options expired on December 31, 2026. Other information pertaining to the stock option plan follows: Total compensation according to a fair value options pricing model $ 845,000 Total number of shares that could be purchased with the stock options 65,000 Option price per share $ 27 Market price of Red Lake common shares on January 1, 2021 $ 27 Market price of Red Lake common shares on June 15, 2025 $ 37 Assume that Red Lake Corporation follows ASPE, and opts to account for employee stock option forfeitures as they occur. Required: 1. What type of stock option plan has been granted? Explain your rationale. (3 marks) 2. Prepare all journal entries required for the stock option plan for the 2021 year to the 2026 year. Assume that Red Lake Corporation has a December 31 year end. (6 marks) - Stock Options On January 1, 2021, Red Lake Corporation issued stock options for its common sharesto executive officers. The options are exercisable beginning on January 1, 2023, provided the executive officers are still employed by Red Lake at the time the options are exercised on June 15, 2025, 3 quarters of the stock options were exercised. The remainder of the options expired on December 31, 2026. Other information pertaining to the stock option plan follows: $ 845,000 Total compensation according to a fair value options pricing model Total number of shares that could be purchased with the stock options Option price per share Market price of Red Lake common shares on January 1, 2021 Market price of Red Lake common shares on June 15, 2025 $ $ 65,000 27 27 37 Assume that Red Lake Corporation follows ASPE, and opts to account for employee stock option forfeitures as they occur. Required: 1. What type of stock option plan has been granted? Explain your rationale. (3 marks) 2. Prepare all journal entries required for the stock option plan for the 2021 year to the 2026 year. Assume that Red Lake Corporation has a December 31 year end. (6 marks)
