A company has its share capital divided into shares of ₹10 each. On 1st April, 2014, it granted 5,000 shares as employees stock options at ₹40 per share, when the market price was ₹130 per share. The options were to be e

Journal Entries in the books of the company Date Particulars Dr. (₹) Cr. (₹) April 01, 2014 Employee Compensation Expenses A/c Dr. To Employee Stock Options Outstanding A/c (Being grant of 5000 stock options to employees at ₹40 when market price is ₹130) 4,50,000 4,50,000 December 16, 2014 Bank A/c (4,500 × 40) Dr. Employee Stock options Outstanding A/c (4,500 × 90) Dr. To Equity share capital A/c (4,500 × 10) To Securities premium A/c (4,500 × 120) (Being allotment to employees of 4500 equity shares of ₹10 each at a premium of ₹120 per share in exercise of stock options by employees) 1,80,000 4,05,000 45,000 5,40,000 March 16, 2015 Employee stock option outstanding A/c Dr. To Employee Compensation Expenses A/c (Being entry for lapse of stock options for 500 shares) 45,000 45,000 March 31, 2015 Profit & Loss A/c Dr. To Employee Compensation expenses A/c (Being transfer of employee compensation expenses to profit and loss account) 4,05,000 4,05,000