On October 15, 2017, the board of directors of Ensor MaterialsCorporation approved a stock option plan for key executives. OnJanuary 1, 2018, 21 million stock options were granted, exercisablefor 21 million shares of Ensor's $1 par common stock. The optionsare exercisable between January 1, 2021, and December 31, 2023, at90% of the quoted market price on January 1, 2018, which was $10.The fair value of the 21 million options, estimated by anappropriate option pricing model, is $4 per option. Ensor choosesthe option to recognize forfeitures only when they occur.
Ten percent (2.1 million) of the options were forfeited when anexecutive resigned in 2019. All other options were exercised onJuly 12, 2022, when the stockâs price jumped unexpectedly to $20per share.
Required:
1. When is Ensorâs stock option measurementdate?
2. Determine the compensation expense for thestock option plan in 2018. (Ignore taxes.)
3. & 5. Prepare the necessary journalentries.:Record compensation expense on December 31, 2019.,Recordcompensation expense on December 31, 2020.,Record the exercise ofthe options in 2022.
On October 15, 2017, the board of directors of Ensor MaterialsCorporation approved a stock option plan for key executives. OnJanuary 1, 2018, 21 million stock options were granted, exercisablefor 21 million shares of Ensor's $1 par common stock. The optionsare exercisable between January 1, 2021, and December 31, 2023, at90% of the quoted market price on January 1, 2018, which was $10.The fair value of the 21 million options, estimated by anappropriate option pricing model, is $4 per option. Ensor choosesthe option to recognize forfeitures only when they occur.
Ten percent (2.1 million) of the options were forfeited when anexecutive resigned in 2019. All other options were exercised onJuly 12, 2022, when the stockâs price jumped unexpectedly to $20per share.
Required:
1. When is Ensorâs stock option measurementdate?
2. Determine the compensation expense for thestock option plan in 2018. (Ignore taxes.)
3. & 5. Prepare the necessary journalentries.:Record compensation expense on December 31, 2019.,Recordcompensation expense on December 31, 2020.,Record the exercise ofthe options in 2022.
Related questions
On October 15, 2015, the board of directors of Ensor MaterialsCorporation approved a stock option plan for key executives. OnJanuary 1, 2016, 38 million stock options were granted, exercisablefor 38 million shares of Ensor's $1 par common stock. The optionsare exercisable between January 1, 2019, and December 31, 2021, at80% of the quoted market price on January 1, 2016, which was $10.The fair value of the 38 million options, estimated by anappropriate option pricing model, is $3 per option.
3.8 million options were forfeited when an executive resigned in2017. All other options were exercised on July 12, 2020, when thestock's price jumped unexpectedly to $36 per share.
When is Ensorâs stock option measurement date?
| Determine the compensation expense for the stock option plan in2016. (Ignore taxes.) (Enter your answer in millions (i.e.,10,000,000 should be entered as 10).) Prepare the necessary journal entries. (If no entry isrequired for a transaction/event, select "No journal entryrequired" in the first account field. Enter your answers inmillions rounded to 1 decimal place (i.e., 5,500,000 should beentered as 5.5).) Record compensation expense on December 31, 2017. Record compensation expense on December 31, 2018. Record the exercise of the options in 2020. |
