kes earning BryteWave Sign in (4 unread) -a bedi Terms and Conditic Amazon.com K
ID: 2508891 • Letter: K
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kes earning BryteWave Sign in (4 unread) -a bedi Terms and Conditic Amazon.com Kitdt C On January D Question 4 2 pts On January 1, 2018, Ritter Company granted stock options to officers and key employees for the purchase of 15,000 shares of the company's $1 par common stock at $20 per share as additional compensation for services to be rendered over the next three years. The options are exercisable during a five-year period beginning January 1, 2020 by grantees still employed by Ritter. The option pricing model determines total compensation expense to be $135,000. The journal entry to record the compensation expense related to these options for 2018 would include a credit to the Paid-in Capital-Stock Options account for o so. O $27.000. O $30,000. $15,000 Question 5 2 pts On January 1. 2018, Gridley Corporation had 250,000 shares of its $2 par valueExplanation / Answer
Accounting for stock compensation plan- Under fair value method, compensation expense is recognised over the service period ( the time between the date of grant and the vesting date). Since the total compensation expense is determined as $135,000 and the service period is for three years, the compensation expense for 2018 on its books should be $45,000 ($135,000/3years)
The journal entry for 2018 would be
Dr compensation expense $45,000
Cr Paid in capital stock option $45,000
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