Question

SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based...

SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2021. The options permit holders to acquire 24 million of the company’s $1 par common shares for $11 within the next six years, but not before January 1, 2024 (the vesting date). The market price of the shares on the date of grant is $13 per share. The fair value of the 24 million options, estimated by an appropriate option pricing model, is $3.30 per option.

Required:

1. Determine the total compensation cost pertaining to the incentive stock option plan.
2. & 3. Prepare the appropriate journal entries to record compensation expense on December 31, 2021, 2022, and 2023. Record the exercise of the options if all of the options are exercised on May 11, 2025, when the market price is $14 per share.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based...
SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2018. The options permit holders to acquire 10 million of the company’s $1 par common shares for $24 within the next six years, but not before January 1, 2021 (the vesting date). The market price of the shares on the date of grant is $26 per share....
American Optical Corporation provides a variety of share-based compensation plans to its employees. Under its executive...
American Optical Corporation provides a variety of share-based compensation plans to its employees. Under its executive stock option plan, the company granted options on January 1, 2018, that permit executives to acquire 10 million of the company’s $1 par common shares within the next five years, but not before December 31, 2019 (the vesting date). The exercise price is the market price of the shares on the date of grant, $55.50 per share. The fair value of the 10 million...
American Optical Corporation provides a variety of share-based compensation plans to its employees. Under its executive...
American Optical Corporation provides a variety of share-based compensation plans to its employees. Under its executive stock option plan, the company granted options on January 1, 2018, that permit executives to acquire 21 million of the company’s $1 par common shares within the next five years, but not before December 31, 2019 (the vesting date). The exercise price is the market price of the shares on the date of grant, $20.50 per share. The fair value of the 21 million...
Magnetic-Optical Corporation offers a variety of share-based compensation plans to employees. Under its restricted stock unit...
Magnetic-Optical Corporation offers a variety of share-based compensation plans to employees. Under its restricted stock unit plan, the company on January 1, 2021, granted restricted stock units (RSUs) representing 24 million of its $1 par common shares to various division managers. The shares are subject to forfeiture if employment is terminated within three years. The common shares have a market price of $4.50 per share on the grant date. Management’s policy is to estimate forfeitures. Required: 1. Determine the total...
Under its executive stock option plan, National Corporation granted 24 million options on January 1, 2021,...
Under its executive stock option plan, National Corporation granted 24 million options on January 1, 2021, that permit executives to purchase 24 million 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, $28 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. Suppose...
Magnetic-Optical Corporation offers a variety of share-based compensation plans to employees. Under its restricted stock unit...
Magnetic-Optical Corporation offers a variety of share-based compensation plans to employees. Under its restricted stock unit plan, the company on January 1, 2021, granted restricted stock units (RSUs) representing 19 million of its $1 par common shares to various division managers. The shares are subject to forfeiture if employment is terminated within three years. The common shares have a market price of $6.00 per share on the grant date. Management’s policy is to estimate forfeitures.    Required: 1. Determine the...
Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January...
Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 64 million $1 par common shares. The exercise price is the market price on the grant date—$6 per share. Options cannot be exercised prior to January 1, 2023, and expire December 31, 2027. The fair value of the 64 million options, estimated by an appropriate option pricing model, is $1 per option. Required: 1. Determine the total compensation...
Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2021, options...
Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2021, options were granted for 60,000 $1 par common shares. The exercise price equals the $5 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2024, and expire December 31, 2025. Each option has a fair value of $1 based on an option pricing model. Which is the correct entry to record the exercise of 90% the...
Under its executive stock option plan, National Corporation granted 29 million options on January 1, 2021,...
Under its executive stock option plan, National Corporation granted 29 million options on January 1, 2021, that permit executives to purchase 29 million of the company’s $1 par common shares within the next eight years, but not before December 31, 2025 (the vesting date). The exercise price is the market price of the shares on the date of grant, $33 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. No...
The Burford Corporation provides an executive stock option plan. Under the plan, the company granted options...
The Burford Corporation provides an executive stock option plan. Under the plan, the company granted options on January 1, 2016, that permit executives to acquire 12 million of the company's $1 par value common shares within the next five years, but not before December 31, 2019 (the vesting date). The exercise price is the market price of the shares on the date of the grant, $14 per share. The fair value of the options, estimated by an appropriate model, is...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT