Reference no: EM132554168

Questions -

Q1. Owl Co. offered an incentive stock plan to its employees. On January 1, Year 1, options were granted for 100,000, $2 par, common shares. The exercise price equals the $20 market price of the common stock on the grant date. The options cannot be exercised before January 1, Year 5, and expire on December 31, Year 7. Each option has a value of $6 based on an option pricing model. What is the compensation expense that Owl will record for Year 1?

A) $120,000

B) $100,000

C) $150,000

D) Zero

Q2. Fox Inc. had 200,000 shares of $1 par common stock outstanding when they declared a stock dividend of 60,000 shares with a market price of $10. How much should additional paid-in capital increase based on this?

A) $0

B) $60,000

C) $600,000

D) $540,000