In order to retain certain key executives, Waterway Industries granted them incentive stock options on December 31, 2020. 144000 options were granted at an option price of $35 per share. Market prices of the stock were as follows: December 31, 2021 December 31, 2022 $46 per share O $2627000. O $1502000. O $1652000. O $751000. 51 per share The options were granted as compensation for executives' services to be rendered over a two-year period beginning January 1, 2021. The Black-Scholes option pricing model determines total compensation expense to be $1502000. What amount of compensation expense should Waterway recognize as a result of this plan for the year ended December 31, 2021 under the fair value method?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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In order to retain certain key executives, Waterway Industries granted them incentive stock options on December 31, 2020.
144000 options were granted at an option price of $35 per share. Market prices of the stock were as follows:
December 31, 2021
December 31, 2022
$46 per share
O $2627000.
O $1502000.
O $1652000.
O $751000.
51 per share
The options were granted as compensation for executives' services to be rendered over a two-year period beginning January 1,
2021. The Black-Scholes option pricing model determines total compensation expense to be $1502000. What amount of
compensation expense should Waterway recognize as a result of this plan for the year ended December 31, 2021 under the fair
value method?
Transcribed Image Text:In order to retain certain key executives, Waterway Industries granted them incentive stock options on December 31, 2020. 144000 options were granted at an option price of $35 per share. Market prices of the stock were as follows: December 31, 2021 December 31, 2022 $46 per share O $2627000. O $1502000. O $1652000. O $751000. 51 per share The options were granted as compensation for executives' services to be rendered over a two-year period beginning January 1, 2021. The Black-Scholes option pricing model determines total compensation expense to be $1502000. What amount of compensation expense should Waterway recognize as a result of this plan for the year ended December 31, 2021 under the fair value method?
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