Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On October 1 5 , 2 0 2 3 , the board of directors of Martinez Materials Corporation approved a stock option plan for key

On October 15,2023, the board of directors of Martinez Materials Corporation approved a stock option plan for key executives. On January 1,2024,18 million stock options were granted, exercisable for 18 million shares of Martinez's $1 par common stock.
The options are exercisable between January 1,2027, and December 31,2029, at 80% of the quoted market price on January 1,2024, which was $15.
The fair value of the 18 million options, estimated by an appropriate option pricing model, is $6 per option.
Martinez chooses the option to recognize forfeitures only when they occur.
Ten percent (1.8 million) of the options were forfeited when an executive resigned in 2025.
All other options were exercised on July 12,2028, when the stock's price jumped unexpectedly to $37 per share.
Required:
When is Martinez's stock option measurement date?
Determine the compensation expense for the stock option plan in 2024.(Ignore taxes.)
Prepare the journal entries to reflect the effect of forfeiture of the stock options on Martinez's financial statements for 2025 and 2026.
Prepare the journal entry to account for the exercise of the options in 2028.
Complete this question by entering your answers in the tabs below.
Req 1 and 2
Req 3 and 5
& 5. Prepare the necessary journal entries.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e.,5,500,000 should be entered as 5.5).
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Global Financial Accounting And Reporting Principles And Analysis

Authors: Peter Walton, Walter Aerts

2nd Edition

1408017725, 978-1408017722

More Books

Students also viewed these Accounting questions

Question

What are possible safety concerns? Explain.

Answered: 1 week ago

Question

What would you do if you were in Margarets shoes?

Answered: 1 week ago