Prepare the Journal entries that Fortune for Transactions
Not what you're looking for?
Listed below are transactions dealing with various stock benefit plans of Fortune-Time Corporation during the period 2009-2011. The market price of the stock is $45 at January 1, 2009.
a.On Jan. 1,09, the company issued 10 million common shares to divisional managers under its restricted stock award plan. The shares are subject to forfeiture if employment is terminated within three years.
b.On Jan. 1,09, the comp. granted incentive stock options to its senior management exercisable for 1.5 million common shares. The options must be exercised within 5 years, but not before Jan. 1,10. The exercise of the stock options is equal to the fair market value on the CS on the date of options are granted. An option pricing model estimates the fair value of the options to be $4 per option. All recipients are expected to remain employed through the vesting date.
c.On jan. 1,09, the company granted 4 million Stock Appreciation Right's (SAR's) to its junior managers. The SAR's entitle managers to receive their choice of cash or stock equal in value to the excess of the market price at exercise over the share price at the date of grant. The SAR's vest at the end of 2010 ( can not be exercise until then)and expire at the end of 2011. The fair value of the SAR's is $4 at jan.1,08. The fair value is $5 and $4 at Dec. 31,10, respectively.
d.Recorded compensation expense on Dec. 31, 09.
e.A divisional manager holding 1 million of the restricted shares left the company to become CEO of a competitor on Sep. 15,09, before the required service period ended.
f.Recorded compensation expense on Dec. 31,09
Required:
Prepare the Journal entries that Fortune-Time recorded for each of these transactions. (Ignore any tax effects).
Purchase this Solution
Solution Summary
The expert prepares the journal entries that fortune for transactions.
Solution Preview
ANSWERS
Please see attached file for answers.
Account Title Debit Credit
a) NO JOURNAL ENTRY
Memorandum entry:
Number of shares issuable 10,000,000
Fair value per share $45.00
Total compensation $450,000,000
Restriction 3 years
Compensation expense to be recognized at the end of each of the three years: ...
Purchase this Solution
Free BrainMass Quizzes
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
Basics of corporate finance
These questions will test you on your knowledge of finance.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Motivation
This tests some key elements of major motivation theories.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.