Question: On January 1, 2016, Howard, Inc. granted to a key executive a fixed compensatory share option plan for 1,000 shares of $4 par common stock

On January 1, 2016, Howard, Inc. granted to a key executive a fixed compensatory share option plan for 1,000 shares of $4 par common stock for $30 a share. The fair value per option on that date was $14. The service period extended through December 31, 2017.

Refer to Exhibit 15-3. What entry, if any, was required on December 31, 2016?

a. no entry was necessary

b. Compensation Expense 7,000
Paid-in Capital Share Options 7,000

c. Compensation Expense 6,000
Paid-in Capital Share Options 6,000

d. Compensation Expense 9,000
Deferred Compensation 9,000

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