Question
Pocasset Corporation offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 28 million $1 par common
Pocasset Corporation offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 28 million $1 par common shares. The exercise price is the market price on the grant date: $8 per share. Options cannot be exercised prior to January 1, 2023 and expire December 31, 2027. The fair value of the 28 million options, estimated by an appropriate option pricing model, is $24 million. On March 12, 2023, managers exercised 75% of the options when the market price was $10 per share. On December 31, 2027, the remaining operation expired without being exercised.
Instructions
Prepare the appropriate journal entries, if any, on the following dates. If no entry is necessary, indicate N/A.
- January 1, 2021
- December 31, 2022.
- March 12, 2023
- December 31, 2027
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started