AnnuG IncGranted 200,000 Stock Options to Its Employees

question 80

Essay

AnnuG Inc.granted 200,000 stock options to its employees.The options expire 45 years after the grant date of January 1,2011,when the share price was $23.Employees still employed by the company six years after the grant date may exercise the option to purchase shares at $45 each; that is,the options vest to the employees after five years.A consultant estimated the value of each option at the date of grant to be $2.50 each.
Requirement:
Record the journal entries relating to the issuance of stock options.

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Definitions:

Debt Principal

The original amount of money borrowed or the remaining balance of a loan, exclusive of interest.

Double-Entry Bookkeeping

An accounting system where every transaction affects at least two accounts to maintain a balanced set of financial records.

Cash Balance

The total amount of cash or cash equivalents that a company or individual has available at any given point in time.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities.