On July 1, 2017, Amos Corporation granted nontransferable, nonqualified stock options to certain key employees as additional

Question:

On July 1, 2017, Amos granted nontransferable, nonqualified stock options to certain key employees as additional compensation. The options permit the purchase of 20,000 shares of Amos's $1 par at a price of $32 per share. On the grant date, the stock's market value was $32 per share. The options were exercisable beginning July 1, 2021, and expire on July 1, 2025. On February 3, 2023, when the stock was selling for $53 per share, all options were exercised. Amos's tax rate is $35%. Amos has a December 31 year end for financial reporting purposes.
Required:
1. How much compensation expense should Amos record in 2017 and 2018 if the options are worth $15 per share on the grant date?
2. Compute the tax benefit that Amos will receive in 2023 when the employees exercise the options.
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