Question: On January 1 , 2 0 2 5 , Crane Company granted John Johnson, an employee, an option to buy 5 0 0 shares of

On January 1,2025, Crane Company granted John Johnson, an employee, an option to buy 500 shares of Crane Co. stock for $30 per share, with the option exercisable for 5 years from the date of grant. Using a fair value option pricing model, total compensation expense is determined to be $5060. Johnson exercised his option on September 1,2025, and sold his 500 shares on December 1,2025.
Quoted market prices of Crane Co. stock during 2025 were:
January 1 $32 per share
September 1 $38 per share
December 1 $42 per share
The service period is two years, beginning January 1,2025. As a result of the option granted to Johnson, using the fair value method, Crane should recognize compensation expense for 2025 on its books in the amount of
Select answer from the options below
$0.
$5060.
$5810.
$2530.

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