Refer to the situation described in P 19–2. Assume Pastner prepares its financial statements using International Financial Reporting Standards (IFRS).

Data From in P 19-2

Pastner Brands is a calendar-year firm with operations in several countries. As part of its executive compensation plan, at January 1, 2024, the company issued 400,000 executive stock options permitting executives to buy 400,000 shares of Pastner stock for $34 per share. One-fourth of the options vest in each of the next four years beginning at December 31, 2024 (graded vesting). Pastner elects to separate the total award into four groups (or tranches) according to the year in which they vest and measures the compensation cost for each vesting date as a separate award. The fair value of each tranche is estimated at January 1, 2024, as follows:

Required:
Determine the compensation expense related to the options to be recorded each year, 2024–2027.

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Vesting Date Dec. 31, 2024 Dec. 31, 2025 Dec. 31, 2026 Dec. 31, 2027 Amount Vesting 25% 25% 25% 25% Fair Value per Option $3.50 $4.00 $4.50 $5.00