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Home / Questions / Nappy Lodge issued 15,000 at-the-money stock options to its management on January 1, 2012.

Nappy Lodge issued 15,000 at-the-money stock options to its management on January 1, 2012.

Nappy Lodge issued 15,000 at-the-money stock options to its management on January 1, 2012. These options vest on January 1, 2015. Nappy's share price was $20 on the grant date and $25 on the vesting date. Estimates of the fair value of the options showed that they were worth $3 on the grant date and $11 on the vesting date. On the vesting date, management exercised all 24,000 options. Nappy has a December 31 year-end.

 

Requirement:

Record all of the journal entries relating to the stock options.

12) On January 1, 2011, Gilmore Inc. granted stock options to officers and key employees for the purchase of 100,000 of the company's no par value common shares at $28 each. The options were exercisable within a five-year period beginning January 1, 2013 by grantees still in the employ of the company, and they expire December 31, 2017. The market price of Gilmore's common share was $20 per share at the date of grant. Using the Black-Scholes option pricing model, the company estimated the value of each option on January 1, 2011 to be $4.00.

 

On March 31, 2013, 60,000 options were exercised when the market value of common stock was $44 per share. The remainder of the options expired unexercised. The company has a December 31 year-end.

 

Requirement:

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