Milestones Limited adopted a compensatory stock option plan on December 31, 2015. The options are non-transferrable; they
Question:
Milestones Limited adopted a compensatory stock option plan on December 31, 2015. The options are non-transferrable; they can be exercised commencing January 1, 2019; and they expire six years after the date of issuance. An individual must be an employee of the company on the exercise date in order to exercise the options. On January 1, 2016, manager Tess Pedraza was granted options for 1,200 shares (1:1 conversion to shares) at an exercise price of $15 per option. Option pricing models produced a related compensation value for the stock option plan of $90,000 on January 1, 2016; the market value of the common shares at that time being $14. On January 3, 2021, Tess Pedraza exercised 1,000 of the options and did not exercise the remaining options when she left Milestones Limited in late 2021.
Required 1: Prepare all entries (annualized totals if applicable) related to Tess Pedraza'soptions.1 January 2016 No entries on grant; disclosure of fact only 31 December 2016: 31 December 2017: 31 December 2018: 3 January 2021: (forfeiture date):
Required 2: What would have been the accounting treatment (provide any applicable entries) if Tess Pedraza left the company to "pursue other career interests" on January 2, 2017?
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella