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Use the following information to answer the next 3_questions. On 1/1/2019, options were granted to executives to purchase 30,000 shares of $10 par value common
Use the following information to answer the next 3_questions. On 1/1/2019, options were granted to executives to purchase 30,000 shares of $10 par value common stock at $40 per share. It is assumed that the options were for services performed equally in 2019 and 2020. The Black- Scholes option pricing model determines the fair value of the options to be $650,000. Half of the options were exercised in 2024 when the market price of the stock was $65. 11. What is the compensation expense for the year 2019? a. S650,000 b. $325,000 C. $1,200,000 d. $600,000 12. What amount of cash did the company receive when the options were exercised in 2024? a. $600,000 b. $375,000 c. $825,000 d. $975,000 13. If the remaining half of the options expire 2025, what journal entry will the company make? a. Compensation expense 150,000 b. Loss on expired options 325,000 PIC - stock options 150,000 PIC - stock options 325,000 c. Loss on expired options 150,000 d. PIC - stock options 325.000 Compensation expense 150,000 PIC - expired options 325,000
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