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 $400,000$ executive stock options permitting executives to buy $400,000$ shares of Pastner stock for $$30$ 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 DateAmount VestingFair Value per OptionDecember $31,202425\%$$ $5\mathrm{.}20$December $31,202525\%$$ $5\mathrm{.}60$December $31,202625\%$$ $6\mathrm{.}60$December $31,202725\%$$ $7\mathrm{.}20$

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.