Weaver implements a new share-based compensation plan in 2014. Under the plan, the company's CEO...
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Weaver implements a new share-based compensation plan in 2014. Under the plan, the company's CEO and CFO each will receive non-qualified stock options to purchase 100,000 , no par shares. The options vest ratably (1/3 of the options each year) over three years, expire in 10 years, and have an exercise (strike) price of $27 per share. Weaver uses the Black-Scholes model to estimate a fair-value per option of $18. The company's tax rate is 35%.
(Keep in mind that there is a timing difference because compensation expense is recorded on the income statement before it is reported on the tax return).
A. Record journal entries for the compensation expense related to these operations for 2014 through 2016.
B. In 2017, company's stock price ia 24$. If you were Weaver CEO, would you exercise your options? Explain.
C. In 2019, the company's stock price is 46$ and the CEO exercises all of her options. Record journal entries to record the exercise
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