【文章內(nèi)容簡介】 lan. 1334 Stock Rights ? When announcing rights to purchase additional shares of stock, the directors of a corporation specify a date on which the rights will be issued. ? All stockholders of record are entitled to the rights. Thus, between the announcement date and the issue date, the stock is said to sell rightson. (continues) 1335 Stock Rights ? After the rights are issued, the stock sells exrights, and the rights may be sold separately by those receiving them from the corporation. 1336 Stock Warrants ? Detachable warrants are similar to stock rights because they can be traded separately from the security with which they were originally issued. ? Nondetachable warrants cannot be separated from the security with which they were issued. 1337 Stock Warrants Stewart Co. sells 1,000 shares of $50 par preferred stock for $58 per share. Stewart Co. gives the purchaser detachable warrants enabling the holders to subscribe to 1,000 shares of $2 par mon stock for $25 per share. Immediately following the issuance of the stock, the warrants are selling for $3, and the fair market value of a preferred share without the warrant attached is $57. 1338 Stock Warrants Value assigned to warrants = Total issue price x Market value of warrants Market value of security without warrants + Market value of warrants $57 + $3 Value assigned to warrants = $58,000 x $3 = $2,900 1339 Stock Warrants The entry on Stewart’s books to record the sale of the preferred stock with detachable warrants is: Cash 58,000 Preferred Stock, $50 par 50,000 PaidIn Capital in Excess of Par— Preferred Stock 5,100 Common Stock Warrants (from Slide 1338) 2,900 1340 Stock Warrants If the warrants are exercised: Common Stock Warrants 2,900 Cash 25,000 Common Stock, $2 par 2,000 PaidIn Capital in Excess of Par— Common Stock 25,900 If the warrants expire: Common Stock Warrants 2,900 PaidIn Capital from Expired Warrants 2,900 1341 The pany estimates a grant date value of $10 for each of the employee stock options. The total fair value of the options granted is $100,000. Compensation expense is allocated over three years from January 1, 2020 (the grant date) to January 1, 2020 (the vesting date). The yearend entry is as follows: $100,000/3 Dec. 31 Compensation Expense 33,333 PaidIn Capital from Stock Options 33,333 2020 ShareBased Compensation 1342 On December 31, 2020, all 10,000 of the options are exercised to purchase Neff’s nopar mon stock: Dec. 31 Cash (10,000 x $50) 500,000 PaidIn Capital from Stock Options 100,000 Common Stock (no par) 600,000 2020 If the options are allowed to expire unexercised: Dec. 31 PaidIn Capital from Stock Options 100,000 PaidIn Capital from Expired Options 100,000 2020 ShareBased Compensation 1343 Accounting for PerformanceBased Plans In a performancebased stock option plan, the plan terms are dependent on how well the individual or pany performs after the date the options are granted. 1344 Accounting for PerformanceBased Plans ? On January 1, 2020, the board of directors of Neff Company authorized the granting of stock options to supplement the salaries of certain employees. ? Each stock option permits the purchase of one share of Neff mon stock at a price of $50 per share。 the market price on January 1, 2020, is also $50 per share. ? Each option is puted to have a value of $10. (continues) 1345 Accounting for PerformanceBased Plans ? The options vest, or bee exercisable, beginning on January 1, 2020, and only if the employee stays with the pany for the entire 3year period. The options expire on December 31, 2020. ? The number of options granted is contingent on Neff’s level of sales for 2020. If Neff sales are less than $50 million, only 10,000 options will vest. (continues) 1346 Accounting for PerformanceBased Plans ? If Neff’s 2020 sales are between $50 million and $80 million, an additional 2,000 options will vest. If Neff’s 2020 sales exceed $80 million, a total of 15,000 options will vest. ? Neff’s share price changed as follows over the 3year vesting period: Jan. 1, 2020, $50。 Dec. 31, 2020, $56。 Dec. 31, 2020, $57。 Dec. 31, 2020, $59 1347 Accounting for PerformanceBased Plans Recognition of pensation of $40,000 for each of the three years [(12,000 options $10)/3]: Dec. 31 Compensation Expense 40,000 PaidIn Capital from Stock Options 40,000 2020 Sales are expected to be only $40 million, so only 10,000 options will vest on January 1, 2020: Dec. 31 Compensation Expense ($66,667 – $40,000) 26,667 PaidIn Capital from Stock Options 26,667 2020 (continues) 1348 Accounting for PerformanceBased Plans Actual sales for 2020 are $85 million, so 15,000 options will vest on January 1, 2020: Dec. 31 Compensation Expense ($150,000 – $66,667) 83,333 PaidIn Capital from Stock Options 83,333 2020 On December 31, 2020, all 15,000 options are exercised to purchase Neff’s nopar mon stock: Dec. 31 Cash ($15