On January 1, 2016, Robertson Company created a fixed compensatory stock option plan for employees to acquire 18,000 shares of $3 par common stock for $22 a share. The options vest after four years of employment, and therefore, they cannot be exercised until January 1, 2020. On the grant date, the fair value of the options was $5 per option. All options were exercised on June 30, 2020. Robertson Company accounts for this plan using the fair value method.
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Required:
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Record all entries relating to this stock option plan over the life of the plan.
What will be an ideal response?
| Record annual compensation expense for each of the years 2016-2019: | |||
| Compensation Expense ($90,000/4) | 22,500 | ? | |
| ? | Paid-in Capital from Share Options | ? | 22,500 |
| ? | ? | ? | |
| Record the exercise of the options on June 30, 2020: | ? | ? | |
| Cash ($22´18,000) | 396,000 | ? | |
| Paid-in Capital from Share Options | 90,000 | ? | |
| ? | Common Stock ($3´18,000) | ? | 54,000 |
| ? | Additional Paid-in Capital on Common Stock | ? | 432,000 |
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