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Wilson Inc. developed a business strategy that uses stock options as a major compensation incentive for its top executives. On January 1, 2018, 20 million
Wilson Inc. developed a business strategy that uses stock options as a major compensation incentive for its top executives.
- On January 1, 2018, 20 million options were granted, each giving the executive owning them the right to acquire seven $1 par common shares.
- The exercise price is the market price on the grant date$10 per share.
- Options vest on January 1, 2022. They cannot be exercised before that date and will expire on December 31, 2024.
- The fair value of the 20 million options, estimated by an appropriate option pricing model, is $40 per option. Ignore income tax.
On March 1, 2022, when the market price of Wilson's stock was $14 per share, 3 million of the options were exercised.
The journal entry to record this would include:
Group of answer choices
A credit to common stock for $21 million
A credit to paidin capitalexcess of par for $255 million
A debit to paid-in capitalstock options for $42 million
All of these answer choices are correct
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