On Jan. 1, 2020, Hufflepuff Industries, Inc.issues stock options for 100,000 shares to aregional manager. The options have anestimated fair value of $6 each. The provideadditional incentive for the manager'sachievement, the options are not exercisableunless the region revenue increase by 8% inthree years. Hufflepuff initially estimates that itis probable that the goal will be achieved. Howmuch compensation will be recorded in 2020,2021, and 2022, the vesting period?

A contract between the two person which provides the right to the holder to buy or sell a specified…

Answered: On Jan. 1, 2020,

Business

Accounting

On Jan. 1, 2020,

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 7RE: On January 1, 2019, Phoenix Corporation adopts a performance-based share option plan for 25...

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

100%

On Jan. 1, 2020, Hufflepuff Industries, Inc.
issues stock options for 100,000 shares to a
regional manager. The options have an
estimated fair value of $6 each. The provide
additional incentive for the manager's
achievement, the options are not exercisable
unless the region revenue increase by 8% in
three years. Hufflepuff initially estimates that it
is probable that the goal will be achieved. How
much compensation will be recorded in 2020,
2021, and 2022, the vesting period?

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