On January 1, 2016, Sixty Executives Are Offered a Fixed

question 93

Essay

On January 1, 2016, sixty executives are offered a fixed compensatory stock option plan in which each of them will receive options to buy 5,000 shares of $10 par common stock at $30 a share. On the grant date, the fair value per option is $7.50. There is a three-year service period and an estimated annual employee turnover rate of 3%.
Required:
a. Compute the expected total compensation cost.
b. Compute the compensation expense for 2016.
c. Prepare the journal entry to record the exercise of options by six of the executives on
January 1, 2019.

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Definitions:

Antebellum Era

The period in American history before the Civil War, known for its escalating conflicts over slavery.

Benevolent Organizations

Groups or societies founded for the purpose of performing acts of kindness or charity, often providing support to those in need.

Slave Patrols

Organized groups that enforced discipline on slaves and captured escaped slaves in the Southern United States before the Civil War.

White Citizens

A demographic term historically used in the United States to categorize individuals of European descent or those identified as white in legal and social contexts.