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Reporting period |
Fair value per option |
Number of options |
Aggregate fair value |
Percentage of services rendered |
Cumulative compensation cost |
Compensation cost previously recognized |
Current period compensation cost (benefit) |
1/1/20X1 |
$10 |
1,000 |
$10,000 |
0% |
$0 |
$0 |
$0 |
12/31/20X1 |
$15 |
1,000 |
$15,000 |
25% |
$ 3,750 |
$0 |
$ 3,750 |
12/31/20X2 |
$30 |
1,000 |
$30,000 |
50% |
$15,000 |
$ 3,750 |
$11,250 |
12/31/20X3 |
$35 |
1,000 |
$35,000 |
75% |
$26,250 |
$15,000 |
$11,250 |
12/31/20X4 |
$25 |
1,000 |
$25,000 |
100% |
$25,000 |
$26,250 |
$(1,250) |
Dr. Compensation expense |
$3,750 |
|
Cr. Additional paid-in capital |
$3,750 |
|
To recognize compensation expense in 20X1 |
||
Dr. Compensation expense |
$11,250 |
|
Cr. Additional paid-in capital |
$11,250 |
|
To recognize compensation expense in 20X2 |
||
Dr. Compensation expense |
$11,250 |
|
Cr. Additional paid-in capital |
$11,250 |
|
To recognize compensation expense in 20X3 |
||
Dr. Additional paid-in capital |
$1,250 |
|
Cr. Compensation expense |
$1,250 |
|
To recognize compensation expense (benefit) in 20X4 |
Dr. Cash |
$30,000 |
|
Cr. Common stock |
$10 |
|
Cr. Additional paid-in capital |
$29,990 |
|
To recognize the exercise of 1,000 options at an exercise price of $30; the par value of the common stock is $0.01 |
Tranche |
Vesting date |
Fair value per option |
Number of options in tranche |
Fair value of options in tranche |
1 |
12/31/X1 |
$15 |
250 |
$3,750 |
2 |
12/31/X2 |
$30 |
250 |
$7,500 |
3 |
12/31/X3 |
$35 |
250 |
$8,750 |
4 |
12/31/X4 |
$25 |
250 |
$6,250 |
Reporting period |
Fair value per option |
Number of options |
Aggregate fair value (1) |
Percentage of services rendered |
Cumulative compensation cost |
Compensation cost previously recognized |
Current period compensation cost |
12/31/X1 |
$15 |
1,000 |
$15,000 |
25% |
$3,750 |
$0 |
$3,750 |
12/31/X2 |
$30 |
1,000 |
$26,250 |
50% |
$13,125 |
$3,750 |
$9,375 |
12/31/X3 |
$35 |
1,000 |
$28,750 |
75% |
$21,562 |
$13,125 |
$8,437 |
12/31/X4 |
$25 |
1,000 |
$26,250 |
100% |
$26,250 |
$21,562 |
$4,688 |
Tranche |
Number of options |
20X1 Calculation of aggregate fair value |
20X2 Calculation of aggregate fair value |
20X3 Calculation of aggregate fair value |
20X4 Calculation of aggregate fair value |
1 |
250 |
250 × $15 = $3,750 (2) |
250 × $15 = $3,750 (2) |
250 × $15 = $3,750 (2) |
250 × $15 = $3,750 (2) |
2 |
250 |
250 × $15 = $3,750 (3) |
250 × $30 = $7,500 (2) |
250 × $30 = $7,500 (2) |
250 × $30 = $7,500 (2) |
3 |
250 |
250 × $15 = $3,750 (3) |
250 × $30 = $7,500 (3) |
250 × $35 = $8,750 (2) |
250 × $35 = $8,750 (2) |
4 |
250 |
250 × $15 = $3,750 (3) |
250 × $30 = $7,500 (3) |
250 × $35 = $8,750 (3) |
250 × $25 = $6,250 (2) |
Total |
$15,000 |
$26,250 |
$28,750 |
$26,250 |
Dr. Compensation expense |
$3,750 |
|
Cr. Additional paid-in capital |
$3,750 |
|
To recognize compensation expense in 20X1 |
||
Dr. Compensation expense |
$9,375 |
|
Cr. Additional paid-in capital |
$9,375 |
|
To recognize compensation expense in 20X2 |
||
Dr. Compensation expense |
$8,473 |
|
Cr. Additional paid-in capital |
$8,473 |
|
To recognize compensation expense in 20X3 |
||
Dr. Compensation expense |
$4,688 |
|
Cr. Additional paid-in capital |
$4,688 |
|
To recognize compensation expense in 20X4 |
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