On January 1, 2018, 30 employees are granted stock options for 250 common shares each, a total
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Question:
On January 1, 2018, 30 employees are granted stock options for 250 common shares each, a total of 7,500 shares, at an option price of $25 per share. The options vest 4 years after the grant date. The options are valued using an option pricing model at $60,000 total.
Forfeiture estimates are updated at the end of each year:
End of Year 2018 2019 2020 2021
Management Estimates
- Employees expected
to remain 26 (87%) 24 (80%) 23 (77%) n.a.
- Expected forfeitures 4 (13%) 6 (20%) 7 (23%) n.a.
Factual History
- Actual forfeitures 6 1 2 0
- Employees receiving options 21 (30 – 9)
REQUIRED: Prepare a schedule to calculate compensation expense each year and make entries for each year to record it
Related Book For
Intermediate Accounting
ISBN: 978-0078025839
9th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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