On January 1, 2021, Farmer Fabrication Issued stock options for 100,000 shares to a division manager....

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On January 1, 2021, Farmer Fabrication Issued stock options for 100,000 shares to a division manager. The options have an estimated falr value of $6 each. To provide additional Incentive for managerlal achlevement, the options are not exercisable unless divisional revenue increases by 5% In three years. Suppose that Farmer Initlally estimates that It Is not probable the goal will be achleved, but then after one year, Farmer estimates that It is probable that divisional revenue will Increase by 5% by the end of 2023. Requlred: 1. What Is the revised estimate of the total compensation? 2. What action wll be taken to account for the options in 2022? 3. Prepare the joumal entries to record compensation expense in 2022 and 2023. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Reg 1 and 2 Req 3 Prepare the journal entries to record compensation expense in 2022 and 2023. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) No Date General Journal Debit Credit 2022 Compensation expense 600.000 Paid-in capital - stock options 600,000 2023 Compensation expense 300,000 Paid-in capital - stock options 300,000 X < Req 1 and 2 Reg 3> On January 1, 2021, Farmer Fabrication Issued stock options for 100,000 shares to a division manager. The options have an estimated falr value of $6 each. To provide additional Incentive for managerlal achlevement, the options are not exercisable unless divisional revenue increases by 5% In three years. Suppose that Farmer Initlally estimates that It Is not probable the goal will be achleved, but then after one year, Farmer estimates that It is probable that divisional revenue will Increase by 5% by the end of 2023. Requlred: 1. What Is the revised estimate of the total compensation? 2. What action wll be taken to account for the options in 2022? 3. Prepare the joumal entries to record compensation expense in 2022 and 2023. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Reg 1 and 2 Req 3 Prepare the journal entries to record compensation expense in 2022 and 2023. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) No Date General Journal Debit Credit 2022 Compensation expense 600.000 Paid-in capital - stock options 600,000 2023 Compensation expense 300,000 Paid-in capital - stock options 300,000 X < Req 1 and 2 Reg 3>

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As question 3 is asked Explanation Journal entry 00002022 employee compensation ex... View the full answer