Problem $19-2($Algo$)$ Stock options; graded vesting; financial statement effects $[$LO$19-2]$

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 $320,000$ executive stock options permitting executives to buy $320,000$ shares of Pastner stock for $$44$ 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:

Vesting Date Amount Vesting Fair Value per Option

December $31,202425\%$ $ $4\mathrm{.}50$

December $31,202525\%$ $ $5\mathrm{.}00$

December $31,202625\%$ $ $5\mathrm{.}40$

December $31,202725\%$ $ $6\mathrm{.}00$

Required:

Determine the compensation expense related to the options to be recorded each year $20242027,$ assuming Pastner allocates the compensation cost for each of the four groups $($tranches$)$ separately.

Determine the compensation expense related to the options to be recorded each year $20242027,$ assuming Pastner uses the straight$-$line method to allocate the total compensation cost.