※For calculation problems , please include the process of solving them in the submission answer. [Topic: Stock-Based Com

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※For calculation problems , please include the process of
solving them in the submission answer.
[Topic: Stock-Based Compensation]
On January 1, 20×1, Company A granted 10
stock options per employee to 10 employees in the
production department on the condition that they worked for two
years.
Company A may decide whether to issue shares at the time
of the exercise of the option or to pay the difference
between the compensation base price and the exercise price in
cash.
The option fair value of the grant date is $400 per unit, and
the exercise price per unit is $200. Company A predicted that all
of its employees would be employed by the end of 20×2 years,
and this prediction was realized.
Of the employees who were granted the option , 5 exercised
their rights in full on January 1, 20×3, and the
remaining 5 exercised on January 1, 20×4. The fair value and
share price flow per option unit of Company A are as follows:
However, it is assumed that the share price on December 31 and the
stock price on January 1 of the following year are the
same.
Sun Chair
Fair Value of Options
1 share price per week
January 1, 20×1
400
200
20×1-12-31
500
400
December 31, 20×2
600
600
December 31, 20×3
700
800
(Question 1) When Company A decides to grant shares,
seek compensation costs to be recognized in 20×2 and
20×3.
(Question 2) When Company A decides to pay the
difference between the compensation base price and the exercise
price in cash, seek compensation costs to be recognized in the
years 20×3 and 20×4, provided that the stock compensation cost is
the conversion effect (-).
(Question 3) This is an independent case from the
above question. Company B granted 1,000 stock options to the
Chief Executive Officer on January 1, 20×1, as a condition of
providing 3 years of service. The exercise price of the stock
options is linked to the rate of profit growth as
follows:
Average annual profit growth rate
Strike Price
Fair Value of Stock Options
More than 5% to less than 10%
5,000
1,500
More than 10%
2,000
3,000
In 20×2, the average annual profit growth rate was expected to
be more than 10%, but at the end of 20×3 the average annual
profit growth rate was only 6%. If the Chief Executive Officer
meets the conditions for providing services, calculate the
compensation costs that Company B should recognize in
20×3.