On January 1, 2014, Nelson Company gave 45 executives a performance-based stock option plan that allowed them to buy a maximum of 2,000 shares each of the company's $5 par common stock at $15 a share. On the grant date, the fair value per option was $8. The shares will be awarded based on the increase in sales over a four-year service and vesting period as follows:
The company estimates sales will increase by 8% during the service period and that the annual employee turnover rate will be 4%. During 2016, the estimated annual employee turnover rate was changed to 3% for the entire service period. At the end of the four-year period, options vested for the remaining 40 executives and sales actually increased by 12%.
Required:
Prepare the journal entries to reflect the events affecting Nelson's plan for the four-year service period.

Question

On January 1, 2014, Nelson Company gave 45 executives a performance-based stock option plan that allowed them to buy a maximum of 2,000 shares each of the company's $5 par common stock at $15 a share. On the grant date, the fair value per option was $8. The shares will be awarded based on the increase in sales over a four-year service and vesting period as follows:  
The company estimates sales will increase by 8% during the service period and that the annual employee turnover rate will be 4%. During 2016, the estimated annual employee turnover rate was changed to 3% for the entire service period. At the end of the four-year period, options vested for the remaining 40 executives and sales actually increased by 12%.
Required:
Prepare the journal entries to reflect the events affecting Nelson's plan for the four-year service period.

Quizplus · Accepted Answer

The Answer of On January 1, 2014, Nelson Company gave 45 executives a performance-based stock option plan that allowed them to buy a maximum of 2,000 shares each of the company's $5 par common stock at $15 a share. On the grant date, the fair value per option was $8. The shares will be awarded based on the increase in sales over a four-year service and vesting period as follows:  
The company estimates sales will increase by 8% during the service period and that the annual employee turnover rate will be 4%. During 2016, the estimated annual employee turnover rate was changed to 3% for the entire service period. At the end of the four-year period, options vested for the remaining 40 executives and sales actually increased by 12%.
Required:
Prepare the journal entries to reflect the events affecting Nelson's plan for the four-year service period.

On January 1, 2014, Nelson Company Gave 45 Executives a Performance-Based