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On January 1, Year 1, LL Company issued 100 stock options with an exercise price of $18 each to five employees (total 500 options).
- Assume that this is the equity-settled share-based transaction. Record all necessary journal entries from Jan. 1, Year 1 to December 31, Year2. Assume that this is the choice-of-settlement share-based transaction, in which the employees can choose to settle the options either (1) in shares of stock or (2) in cash. The option fair value of cash-settlement is equal to the fair value of equity-settlement.
- Record all necessary journal entries from Jan. 1, Year 1 to December 31, Year 2 if all employees choose the share settlement.