Nappy Lodge Issued 15,000 At-The-Money Stock Options to Its Management

question 28

Essay

Nappy Lodge issued 15,000 at-the-money stock options to its management on January 1, 2021. These options vest on January 1, 2024. 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 15,000 options. Nappy has a December 31 year-end.
Required:
Record all of the journal entries relating to the stock options.

Distinguish between tangible and intangible assets.

Identify the effects of asset acquisition and expenditure on financial statements.

Understand the financial implications of asset disposal and exchange.

Learn the impact of depreciation on financial statements and cash flow.

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Definitions:

Basal Cells

Cells found at the bottom layer of epithelial tissues, involved in constant regeneration and repair of the surface tissue.

Olfactory Adaptation

The process by which the sense of smell becomes accustomed to a continuous or repetitive odor, leading to a decreased sensitivity to that odor.

Basal Cells

Cells found at the base of the epidermis and hair follicles, responsible for generating new skin cells and hair.

Olfactory Epithelium

The specialized tissue in the nasal cavity responsible for detecting odors.