Rebelcork Minerals is a publicly traded company listed on the Toronto Stock Exchange. On 1 January 20X4, the company granted 40,000 stock options to 50 of its employees. Relevant information about Rebelcork Minerals on 1 January 20X4 and the share issuance is as follows:
• Common Shares, no par value, unlimited authorized, 20,480,000 issued and outstanding: $286,720,000
• Average issuance price: $14 per share
• Share price on grant date: $28 per share
• Exercise price: $32 per share

• Stock options to be fully vested 1 January 20X8 and expire 1 January 20X10
• Options non-transferrable
• Options valued at $986,000
Management has estimated the following forfeitures:

Additional information:
• In 20X8, 28 employees exercise their options when the share price is $45 per share.
• In 20X9, 6 employees exercise their options when the share price is $43 per share.

Required:
1. Prepare the entries to record the granting of the options, annual expense, exercise, and lapse.
2. What is the individual intrinsic value received per employee when the options were exercised? Is this reflected in the financial statements? Explain.

Transcribed Image Text:

Employees expected to forfeit their options-per year Employees expected to forfeit their options-cumulative Actual forfeitures-per year Actual forfeitures-cumulative 20X4 6 6 7 7 20X5 4 10 3 10 20X6 2 12 4 14 20X7 I 2 16