P16-3 (LO3) EXCEL (Stock-Option Plan) Berg Company adopted a stock-option plan on November 30, 2016, that provided that 70,000 shares of $5 par value stock be designated as available for the granting of options to officers of the corporation at a price of $9 a share. The market price was $12 a share on November 30, 2017 On January 2, 2017, options to purchase 28,000 shares were granted to president Tom Winter-15,000 for services to be ren- dered in 2017 and 13,000 for services to be rendered in 2018. Also on that date, options to purchase 14,000 shares were granted to vice president Michelle Bennett-7,000 for services to be rendered in 2017 and 7,000 for services to be rendered in 2018. The mar- ket price of the stock was $14 a share on January 2, 2017. The options were exercisable for a period of one year following the year in which the services were rendered. The fair value of the options on the grant date was $4 per optic In 2018, neither the president nor the vice president exercised their options because the the options for 2017 services lapsed. 2019, both president Winter and vice president Bennett exercised their options for 13,000 and 7000 shares respectively, when the market price was $16 a share. Instructions when options lapsed, and in 2019 when options were exercised. P16-4 (LO3) (Stock-Based Compensation) Assume that Amazon.com has a stock-option plan for top management. jourmal entris in 2016 when the stock-option plan was adopted, in 2017 when options weregranted, in 2018 stock option represents the right to purchase a share of Amazon $1 par value common stock in the future at a price equal to the of 2017. The following data relate to the option grant. fair value of the stock at the date of the grant. Amazon has 5,000 stock options outstanding, which were granted at the beginning Exercise price For options Market price at grant date January 1, 2017) Fair value of options at grant date (Ganuary 1, 2017) $40 $6 Service period Instructions Prepare the journal entry(ies) for the first year of the stock-option plan. stock were granted at the beginning of 2017 (a) and (b) avoid recording expense related to this plan. Which of the following provisions must be in place for the plan to avoid (a) (b) Prepare the journal entry(ies) for the first year of the plan assuming that, rather than options, 700 shares of restricted (e) Now assume that the market price of Amazon stock on the grant date was $45 per share. Repeat the requirements for (d) Amazon would like to implement an employee stock-purchase plan for rank-and-file employees, but it would like to (1) Substantially all employees may participate. (2) The discount from market is small (less than 5%). (3) The plan offers no substantive option feature (4) There is no preferred stock outstanding
