Question: Problem 12 (8 marks) On January 1, 2017, Verbier Corp granted 5,000 options to executives. Each option entitled the holder to purchase one common

Problem 12 (8 marks) On January 1, 2017, Verbier Corp granted 5,000

Problem 12 (8 marks) On January 1, 2017, Verbier Corp granted 5,000 options to executives. Each option entitled the holder to purchase one common share at a price of $20 per share. The options vest if the employee continues working for Verbier Corp until January 1, 2021. The market price per share on January 1, 2017 was $15. An option pricing model placed a value of $140,000 on the options. Verbier Corp's year-end was December 31. Required: a) Prepare any journal entries required on i) January 1, 2017 (1 mark) ii) December 31, 2017. (2 marks) b) Prepare the journal entry on January 1, 2021, to record the exercise of 600 options. The market price of each share on this date was $22. (3 marks) c) Assume all of the remaining options expired on December 31, 2021 because the share price dropped to $17. Prepare the journal entry to record the expiry of the the remaining options. (2 mark) 17

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