In order to retain certain key executives, tanner Corporation granted them incentive stock options on December 31,
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Question:
In order to retain certain key executives, tanner Corporation granted them incentive stock options on December 31, 2017. 150,000 options were granted at an option price of $35
per share. Market prices of the stock were as follows:
December 31, 2018 | $46 per share |
December 31, 2019 | 51 per share |
The options were granted as compensation for executives’ services to be rendered over a two-year period beginning January 1, 2018. The Black-Scholes option pricing model determines total compensation expense to be $1,500,000. What amount of compensation expense should Smiley recognize as a result of this plan for the year ended December 31, 2018 under the fair value method?
A. $1,650,000.
B. $ 750,000.
C. $1,500,000.
D. $2,625,000.
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