Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January...

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Walters Audio Visual Inc. offers an incentive stock option planto its regional managers. On January 1, 2018, options were grantedfor 24 million $1 par common shares. The exercise price is themarket price on the grant date—$7 per share. Options cannot beexercised prior to January 1, 2020, and expire December 31, 2024.The fair value of the 24 million options, estimated by anappropriate option pricing model, is $1 per option. Required: 1.Determine the total compensation cost pertaining to the incentivestock option plan. 2. to 5. Prepare the appropriate journal entriesto record compensation expense on December 31, 2018 and 2019.Prepare the appropriate journal entry to record the exercise of 75%of the options on March 12, 2020, when the market price is $8 pershare and the entry on December 31, 2024, when the remainingoptions that have vested expire.

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1 Total compensation expense Options grantedEstimated fair value per option Total compensation expense 241 Total compensation expense 24 million The total compensation expense is 24 million 2 Journal entry to record compensation expense in 2018 Date General Journal Debit Credit 31Dec18 Compensation expense 242 12 Paid in capital stock options 12 To record compensation expense See Answer

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Walters Audio Visual Inc. offers an incentive stock option planto its regional managers. On January 1, 2018, options were grantedfor 24 million $1 par common shares. The exercise price is themarket price on the grant date—$7 per share. Options cannot beexercised prior to January 1, 2020, and expire December 31, 2024.The fair value of the 24 million options, estimated by anappropriate option pricing model, is $1 per option. Required: 1.Determine the total compensation cost pertaining to the incentivestock option plan. 2. to 5. Prepare the appropriate journal entriesto record compensation expense on December 31, 2018 and 2019.Prepare the appropriate journal entry to record the exercise of 75%of the options on March 12, 2020, when the market price is $8 pershare and the entry on December 31, 2024, when the remainingoptions that have vested expire.