Stock Compensation (F7:M7)

Question 1

as it pertains to stock options, what is the journal entry needed when the options are granted?

Answer 1

Compensation Exp (d)
APIC-stock options (c)
*just for the year, every year comp expense must be recorded until options are exercisable

Question 2

what is the journal entry needed when the options are exercised?

Answer 2

Cash (d) (exercise price x number of shares)
APIC-stock options (d) (reverses original entry)
CS (c) (par x number of shares)
APIC (c) (squeeze)

Question 3

on which date is a public entity required to measure the cost of employee services in exchange for an award of equity interest (stock), based on FV of the award?

Answer 3

date of grant

Question 4

what is the formula for compensation exp each year?

Answer 4

total comp exp (FV of options at time they were granted)

/years (vesting/service period)

Question 5

what is the journal entry to record the expiration (unexercised) stock options?

Answer 5

APIC-stock options (d)

APIC-expired stock options (c)