Problem 19-7 Performance option plan [L019-2] LCI Cable Company grants 2.0 millo

Question

Problem 19-7 Performance option plan [L019-2] LCI Cable Company grants 2.0 millon performance stock options to key executives at January 1, 2016. The options entitle executives to receive 2.0 million of LCI $1 par common shares, subject to the achievement of specific financial goals over the next four years. Attainment of these goals is considered probable initially and throughout the service period. The options have a current fair value of $10 per option. Required: 2. Record the necessary journal ontries. (f no entry ie required for a transactionlevent, solect "No journal entry required" in the first account field. Enter your decimal place.00.000 should be ntred as View transaction list Journal entry worksheet Record the grant of 2 million performance stock options when the options have a fair value of $10 per option as on January 01, 2016. Note: Enter debits before credits Event General Journal Debit Credit Record entry Clear entry View general journal SC FI F2

Explanation / Answer

1 No entry until the end of the reporting period, but compensation must be estimated at the grant date: 2million performance stock *10 per option = 20m estimated total compensation General Journal Debit Credit 2 Compensation expense 20/4 5 Paid-in capital – stock options 5 3 a Paid-in capital – stock options (5m*2years) 10 Compensation expense 10 b No entry

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