On January 1, 2017, Kasan Corp. granted stock options to its chief executive officer. This is the only stock option that Kasan offers and the details are as follows:
Option to purchase: 2,500 common shares
Option price per share: $36.00
Fair value per common share on date of grant: $28.50
Stock option expiration: The earlier of eight years after issuance or the employee's cessation of employment with Kasan for any reason other than retirement
Date when options are first exercisable: The earlier of four years after issuance or the date on which the employee reaches the retirement age of 65
Fair value of options on date of grant: $8.00
On January 1, 2022, 2,000 of the options were exercised when the fair value of the common shares was $39. The remaining stock options were allowed to expire. The CEO remained with the company throughout the period.
Instructions
Record the journal entries at the following dates. Assume that the entity follows ASPE and has decided not to include an estimate of forfeitures upon initial recognition of the compensation expense.
(a) January 1, 2017
(b) December 31, 2017, the fiscal year end of Kasan Corp.
(c) January 1, 2022, the exercise date
(d) December 31, 2024, the expiry date of the options