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MariettaO [177]
1 year ago
10

on january 1, 2021, adams-meneke corporation granted 15 million incentive stock options to division managers, each permitting ho

lders to purchase one share of the company’s $1 par common shares within the next six years, but not before december 31, 2023 (the vesting date). the exercise price is the market price of the shares on the date of grant, currently $52 per share. the fair value of the options, estimated by an appropriate option pricing model, is $4 per option. management’s policy is to estimate forfeitures. no forfeitures are anticipated. ignore taxes.
Business
1 answer:
Bingel [31]1 year ago
3 0

Compensation expense for the stock option plan in 2021, 2022, 2023 are $210 millions, $96 million, $108 million.

Options granted 120 Millions

Multiply: Estimated fair value per option is $ 3

Total Compensation Expense is $ 360 Millions

Divided by: No. of years in vesting period (2021,2022 & 2023) 3 Years

Compensation expense for the stock option plan in 2021. is $ 120 Millions

  •                     <u>Amounts are expressed in millions $.</u>

<u>Date </u>                   <u>General journal </u>                     <u>debit</u>             <u>Credit </u>

31st Dec, 2021 Compensation expense            $ 120

                     Paid in capital – stock options                     $ 120

  • Percentage of option forfeited (100%-10%) = 90%
  • Cumulative Compensation expense Up to Year 2022 (360*90%*2/3) = $ 216

Less: recognized in earlier year is $ 120

Compensation expense For Year 2022 is $ 96

Cumulative Compensation expense Up to Year 2023 (360*90%*3/3)  

                                                                                          = $ 324

Less: recognized in earlier year is $ 216

Compensation expense For Year 2023 is $ 108

  •                        <u>Amounts are expressed in millions $.</u>

<u> Date </u>                     <u>General journal </u>                   <u>debit  </u>         <u>Credit </u>

31st Dec, 2023 Compensation expense           $ 96  

                      Paid in capital – stock options                    $ 96

     

31st Dec, 2023 Compensation expense    $ 108  

                      Paid in capital – stock options                   $ 108

Learn more about Compensation Expense, here

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Hope this helps

7 0
3 years ago
The Company uses lower-of-cost-or-market approach. The replacement cost of an inventory item is $75. Net realizable value is $82
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Answer:

The inventory would be valued at $75 each

Explanation:

From  a market approach to valuation,we need to first of all compare the replacement cost and net realizable in order to pick the lower of both values,hence the replacement cost of $75 is lower than net realizable value of $82.50.

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3 years ago
Read 2 more answers
Suppose that a cafe enjoys a large increase in customers whenever the jazz club next door features a band playing appealing musi
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Answer:

The answer is "Option 2".

Explanation:

please find the complete question in the attached file.

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4 0
3 years ago
On a total product curve with labor on the horizontal axis, the inflection point represents the quantity of labor where
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3 0
3 years ago
The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based
son4ous [18]

Answer:

$81.96 per unit

Explanation:

For computing the selling price using the absorption costing approach we need to do the following calculations which are shown below:

Unit Product Cost = Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead

= $26.50 + 15.50 + 3.70 + [$156,71,400 ÷ 97,000 Units]

= $26.50 + 15.50 + $3.70 + $16.20

= $61.90

Now

Selling and administrative expenses  is

=$1,540,000 + [97,000 Units × $3.60]

= $1,540,000 + 349,200

= $1,889,200

And,

Markup on absorption cost

= [(Investment × Return on Investment) + Selling and administrative expenses] ÷ (Number of units × unit product cost)

= [($380,000 × 15%) + 1,889,200] / [97,000 × $61.90]

= $19,46,200 ÷ 60,04,300

= 0.3241 or  32.41%

So,

The selling price based on the absorption costing approach

= Unit product cost × (1 + Markup on absorption cost)

= $61.90 per unit × (1 + 0.3241)

= $81.96 per unit

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