Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. brief exercise 19-10 performance-based options [lo

Brief Exercise 19-10 Performance-based options [LO19-2] On October 1, 2018, Farmer Fabrication issued stock options for 280,000...

70.2K

Verified Solution

Question

Accounting

Brief Exercise 19-10 Performance-based options [LO19-2]

On October 1, 2018, Farmer Fabrication issued stock options for280,000 shares to a division manager. The options have an estimatedfair value of $5 each. To provide additional incentive formanagerial achievement, the options are not exercisable unlessdivisional revenue increases by 2% in four years. Suppose thatFarmer initially estimates that it is not probable thegoal will be achieved, but then after one year, Farmer estimatesthat it is probable that divisional revenue will increase by 2% bythe end of 2020.

Required:

1. What is the revised estimate of the totalcompensation?
2. What action will be taken to account for theoptions in 2019?
3. Prepare the journal entries to recordcompensation expense in 2019 and 2020.

Answer & Explanation Solved by verified expert
3.9 Ratings (681 Votes)
Please    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Sugary drink tax/soda taxand Mammography are different levels of prevention, please categorize them from the three options...

Basic Math
Q

The immune response to any virus is similar to the one you've mapped out in your...

Medical Sciences
Q

Describe theoretical and regional flood frequency analysis method for computation of flood hazard.

Civil Engineering
Q

Fairview is hosting a city-wide arts festival at which vendors can pay to have a...

Basic Math
Q

Which breed(s) have weights that are prime numbers?Cocker Spaniel, German Shepherd BeagleA Lakeland Terrier weighs...

Basic Math
Q

Let A 7 2 5 3 v 06 9 1 9 10 62 Find a...

Algebra
Q

Part 1: Meurer, Inc. purchased the following assets and constructed a building as well. All...

Accounting
Q

Question 1 Twitter Enterprise sells electrical products including washing machines, air conditioners, Water heaters and...

Accounting
Q

On July 1, 2015, Truman Company acquired a 70 percent interest in Atlanta Company in...

Accounting
Q

1. Snyders-Lance manufactures, markets, and distributes a variety of snack food...

Accounting
Q

Nyack Company is considering a project that is expected to provide cash inflows of $20,000...

Accounting
Q

Refine Assumptions for PPE Forecast Following are the income statement and balance sheet...

Accounting