$900,000 (plug) MARKET HAS NO MEANING HEREġ2 May 1, 2010: 10,000 options exercised when mkt $77 December 31, 2008: End of the first service year Compensation expense…………. All options exercised during 2010 20,000 on 1/3 mkt $67 10,000 on 5/1 when mkt $77 Prepare entries related to the stock option plan in 2008, 2009, Assume service performed equally in 20ġ0 January 2, 2008: GRANT DATE No entry-Just determine total compensation cost of $450,000. Value option pricing model determines total compensation expense $450,000. Granted Exercisable 2 years after date of grant if still an employee Expired 6 years from date of grant. Key execs could purchase 30,000 shares of $10 par c/s. $90,000 (accrued ) (could also credit payable) WHICH METHOD was used to allocate costs? INCREMENTAL security for which the market value is determinable is used, and the remainder of the purchase price is allocated to the security for which the market value is not known.ĩ 11-1-07 Columbo adopted stock option plan. $24,000 (value of stock warrants) Bond interest expense. Cash $4,220,000 Unamortized bond issue csts. Bond issue costs of $30,000 were incurred. Interest is payable on December 1 and June 1. No market value can be determined for the bonds above. Shortly after issuance, the warrants were quoted on the market for $3 each. Each bond carried two detachable warrants each warrant was for one share of common stock at a specified option price of $15/sh. 09 x 3/12 = $90,000 accrued interestħ On SeptemSands Company sold at 104 (plus accrued interest)Ĥ,000 of its 9%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. ACCRUED INTEREST TO DATE OF SALE 3 months is accrued at point of sale (june, july, august) 4,000 x $1,000 x. ![]() Sale price of the bonds 4,000 bonds x $1,000 face x 1.04 = $4,160,000 Face value of the bonds $4,000,000 Overage $160,000 value assigned to stock warrants $24,000 4,000 x 2 = 8,000 warrants x $3 mkt = $24,000 $136,000 PREMIUMĦ On SeptemSands Company sold at 104 (plus accrued interest)Ĥ,000 of its 9%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. PREPARE in general journal format the entry to record the ISSUANCE of the bonds. No market value can be determined for the Sands Co. ![]() Assuming that the book value method was used, what entry would be made? $500,000 / $1,000 = 500 units x 20 shares = 10,000 shares of p/s x $50/par = $500,000 p/s Bonds payable $500,000 Premium on b/p $ 7,500 Preferred stock $500,000 APIC(PS) $ 7,500ĥ On SeptemSands Company sold at 104 (plus accrued interest)Ĥ,000 of its 9%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. ![]() All bonds are converted into preferred stock. Each $1,000 bond is convertible into 20 shares of preferred stock of par value of $50 per share. Vargo Company has bonds payable outstanding in the amount of $500,000 and the Premium on Bonds Payable account has a balance of $7,500.
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