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(solution) On January 1, 2007 Sampress Company adopts a compensatory share


On January 1, 2007 Sampress Company adopts a compensatory share option plan for its 50 executives. The plan allows each executive to purchase 200 shares of its $2 par common stock for $30 per share after completing a three-year service period. Sampress estimates the value of each option to be $14.00 on the grant date. It has had a 4% employee turnover rate each year and uses this rate in its compensation cost calculations in 2007. Because of higher turnover, at the end of 2008 Sampress changes it estimated turnover rate to 5% per year for the entire service period. At the end of 2009, Sampress determined that the actual turnover was seven executives for the entire service period. On January 6, 2010, eight executives exercise their options. Required 1. Prepare a schedule of the Sampress Company’s compensation computations for its compensatory share option plan for 2007 through 2009 (round all computations to the nearest dollar). 2. Prepare the journal entries of Sampress Company for 2007 through 2010 in regard to this plan.

 


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