Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Burford Corporation provides an executive stock option plan. Under the plan, the company granted options on January 1, 2013, that permit executives to acquire
The Burford Corporation provides an executive stock option plan. Under the plan, the company granted options on January 1, 2013, that permit executives to acquire 12 million of the company's $1 par value common shares within the next ten years, but not before December 31, 2016 (the vesting date). The exercise price is the market price of the shares on the date of the grant, $14 per share. The fair value of the options, estimated by an appropriate model, is $3 per option. No forfeitures are anticipated. Ignore taxes. (1) Determine the total compensation cost pertaining to the options. Show calculations. (2) Prepare the appropriate journal entry (if any) to record the award of the options on January 1, 2013. (3) Prepare the appropriate journal entry (if any) to record the compensation expense on December 31, 2013. (4) On January 1, 2017, 2 million of the options are exercised. The market price is $20 per share. Prepare the appropriate journal entry to record this transaction
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