Problem - Issuance and Termination of Stock Options

Assignment Help Accounting Basics
Reference no: EM132471839

Problem - Issuance, Exercise, and Termination of Stock Options

On January 1, 2017, Waldorf Corporation granted 40,000 options to key executives. Each option allows the executive to purchase one share of Waldorf's common shares at a price of $30 per share. The options were exercisable within a two-year period beginning January 1, 2019, if the grantee was still employed by the company at the time of the exercise. On the grant date, Waidorf's shares were trading at $25 per share, and a fair value options pricing model determined total compensation to be $1,680,000. Management has assumed that there will be no forfeitures because they do not expect any of the key executives to leave. On May 1, 2019, 12,000 options were exercised when the market price of Waldorf's shares was $34 per share. The remaining options lapsed in 2020 because executives decided not to exercise their options. Management was indeed correct in their assumption regarding forfeitures in that all executives remained with the company. Assume that Waldorf follows IFRS.

Required -

(a) Prepare the necessary journal entries related to the stock option plan for the years ended December 31, 2017 through 2020.

(b) What is the significance of the $25 market price of the Waldorf shares at the date of grant? Would the exercise price normally be higher or lower than the market price of the shares on the date of grant?

(c) What is the significance of the $34 market price of the Waldorf?

Reference no: EM132471839

Questions Cloud

What likely happened to the market price of the shares : On January 1, 2020, Waldorf Corporation granted 40,000 options to key executives. What likely happened to the market price of the shares in 2023
Calculate total production cost of job for husanti industry : What would be the bid on the job? Calculate the total production cost of the job for Husanti Industries using the current approach to allocating overhead.
Expansionary monetary policy : Which type of open market concept is conducted for expansionary monetary policy
Relationship between real gdp and potential gdp : What does this indicate is the likely relationship between real GDP and potential GDP at the start of the decision-making process?
Problem - Issuance and Termination of Stock Options : Problem - Issuance, Exercise, and Termination of Stock Options. Prepare the necessary journal entries related to the stock option plan for the years ended
Resources using the command approach : Some societies allocate their resources using the 'command' approach. Give one example of when you feel that this type of approach is the best.
What is the projects NPV : At a required return of 11 percent and At a required return of 24 percent, what is the project's NPV? Should the firm accept this project?
Discuss the trade-off involved : Provide two alternative ways to increase physical capital without facing this trade-off.
Describe the types of inflation : Describe the types of inflation and how they might occur in the future.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd