On January $1,2024,$ Farm$$ Fabrication issued stock options for $420,000$ shares to a division manager. The options have an estimated fair value of $$8$ each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by $3\%$ in three years. Suppose that after one year, Farmer estimates that it is not probable that divisional revenue will increase by $3\%$ in three years.

Required:

What is the revised estimate of the total compensation?

What action will be taken to account for the options in $2025?$

What journal entry will be needed to account for the options in $2025?$

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Req $1$ and $2$

What is the revised estimate of the total compensation and what action will be taken to account for the options in $2025?$

$\backslash$table$[[1.$ Estimated total compensation,$],[2.$ What journal entry will be needed to account for the options in $2025?,$Farmer will reverse the $2024$ recorded compensation.$]]$