At January 1, Year 1, Edwards Company issued 10,000 stock options permitting employees to buy 10,000 shares of stock for $50 per share. The vesting schedule (graded-vesting) and value of the options that vest over the 3-year period is estimated at January 1, Year 1, as set forth in the following table. Vesting Date Amount Vesting Fair Value per Option December 31, Year 1 10% $ 2 December 31, Year 2 30% $ 3 December 31, Year 3 60% $ 4 What is the compensation cost for Year 1 relating to these stock options? Note: Do not use the straight-line method.
At January 1, Year 1, Edwards Company issued 10,000 stock options permitting employees to buy 10,000 shares of stock for $50 per share. The vesting schedule (graded-vesting) and value of the options that vest over the 3-year period is estimated at January 1, Year 1, as set forth in the following table. Vesting Date Amount Vesting Fair Value per Option December 31, Year 1 10% $ 2 December 31, Year 2 30% $ 3 December 31, Year 3 60% $ 4 What is the compensation cost for Year 1 relating to these stock options? Note: Do not use the straight-line method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Knowledge Check 01
At January 1, Year 1, Edwards Company issued 10,000 stock options permitting employees to buy 10,000 shares of stock for $50 per share. The vesting schedule (graded-vesting) and value of the options that vest over the 3-year period is estimated at January 1, Year 1, as set forth in the following table.
| Vesting Date | Amount Vesting | Fair Value per Option |
|---|---|---|
| December 31, Year 1 | 10% | $ 2 |
| December 31, Year 2 | 30% | $ 3 |
| December 31, Year 3 | 60% | $ 4 |
What is the compensation cost for Year 1 relating to these stock options?
Note: Do not use the straight-line method.
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