On November 1, 2016, the stockholders of Searle Company approve a plan that grants the companys five executives options to purchase 2,000 shares each of the companys $1 par value common stock. The company grants the options on April 10 , 2017. The executives may exercise the options at any time within the next 10 years. The option price per share is $60, and the market price of the shares at the date of grant is $70 per share. Under the fair value method, the company computes total compensation expense by applying an acceptable fair value option-pricing model. The fair value option-pricing model determines Searles total compensation expense to be $220,000.

Assume that the expected period of benefit is two years, starting with the grant date. Searle would record the transactions related to this option contract as :

second question

On January 1, 2017, Skidmore Company issues 1,000 shares of restricted stock to its CEO, Rail Stalker. Skidmores stock has a fair value of $20 per share on march 18, 2017. Additional information is as follows.

1.The service period related to the restricted stock is five years.

2.Vesting occurs if Stalker stays with the company for a five-year period.

3.The par value of the stock is $1 per share.

1- Skidmore makes the following entry on the grant date (march 18, 2017):

2- Record the journal entry at December 31, 2017, Skidmore records compensation expense:

3- Assume that Stalker leaves on February 3, 2019 (before any expense has been recorded during 2019). The entry to record this forfeiture is as follows: