Question: Morrissey Corporation grants 50 000 stock options to its managerial employees

Morrissey Corporation grants 50,000 stock options to its managerial employees on December 31, 2013, to purchase 50,000 shares of its $1 par value common stock for $60 per share. The market price of a share of common stock on this date is $60 per share. Employees must wait two years before the options vest and they can exercise the options, and this two-year period is the expected period of benefit from the stock options. An option-pricing model indicates that the value of these options on the grant date is $400,000. On June 30, 2016, holders of 30,000 options exercise their options at a time when the market price of the stock is $65 per share. On November 15, 2016, holders of the remaining options exercise them at a time when the market price of the stock is $72 per share.
Present journal entries to record the effects of the transactions related to stock options during 2013, 2014, 2015, and 2016. The firm reports on a calendar-year basis. Ignore income tax effects.


View Solution:


Sale on SolutionInn
Sales2
Views119
Comments
  • CreatedMarch 04, 2014
  • Files Included
Post your question
5000