Problem
In January of Year 1, Relic Company grants five executives options to purchase 1,000 shares each of its $10 par value common stock at $50 per share. The options will vest in 3 years, and must be exercised within 5 years. An option pricing model determines that the total fair value of the options is $400,000, and the market price of the shares on that day is $65.
On January 1, Year 2, an executive leaves the firm. You are recording the appropriate entries for each date below.
To prepare each required journal entry:
1) Click on a cell in the Account Name column and select from the option list the appropriate account. An account may be used once, more than once, or not at all.
2) Enter the corresponding debit or credit amount in the associated column.
3) Round all amounts to the nearest whole number.
4) Not all rows in the table might be needed to complete each journal entry.
5) If no journal entry is needed, check the "No entry required" box at the top of the table as your response.
• Record the journal entries for December 31, Year 1, if any.