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Question 2: On January 1st, 2020 Mandrake Company grants 5,000,000 shares of its $2 par common stock as stock options that employees can purchase in
- Question 2: On January 1st, 2020 Mandrake Company grants 5,000,000 shares of its $2 par common stock as stock options that employees can purchase in 3 years at the exercise price of $15 per share.The fair value of this option is considered to be $5 a share.The company believes only 95% of employees will exercise these options.Make the following journal entries if necessary:
-January 1st, 2020 grant date entry:
-December 31st, 2020 first expense date entry:
-December 31st, 2022 assuming the full expected 95% of employees do exercise their options. The market value of the stock on this date is $50 a share.
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