On January 1, 2008, PWC awarded stock options to two of its top managers, Price and Waterhouse. Price received options to purchase 25,000 shares of PWC $1 par common stock at an exercise price of $10/share. Waterhouse received 15,000 options to purchase DH $1 par common stock at that same exercise price.
An option pricing model is employed to estimate the fair value of the award on the grant date. Each option is valued at $20. The options are first exercisable on January 1, 2012 and expire on December 31, 2013.
On April 18, 2010, Waterhouse accepts an offer from KPMG, Inc. and leaves the company.
On July 29, 2012, Price exercises all her options at a time when DH common sells for $39/share.
PWC is a calendar-year firm and has adopted the fair value approach to measuring compensation expense for all stock-based compensation programs.
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