On January 1, 2012, Barwood Corporation granted 5,000 options to execu

QUESTION

On January 1, 2012, Barwood Corporation granted 5,000 options to executives. Each option entitles the holder to purchase one share of Barwoods $5 par value common stock at $50 per share at any time during the next 5 years. The market price of the stock is $65 per share on the date of grant. The fair value of the options at the grant date is $150,000. The period of benefit is 2 years. Prepare Barwoods journal entries for January 1, 2012, and December 31, 2012 and 2013.
1-Jan-12 No entry 31-Dec-12 Compensation Expense $75,000.00 Paid in Capital Stock Options $75,000.00 31-Dec-13¦

Compensation Expense $75,000.00 Paid in Capital Stock Options $75,000.00

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