Murray Compensation, Inc. issued 100,000 employee share options on 1/1/2016. The grand-date market price is $18 per share, exercise price is also $18 per share, and the fair value of the options is $9 per share. The vesting period is 3 years. How much stock option compensation should be record for the first year (2016)? Due to the significant decrease in stock price, the fair value of the option dropped to $4 per share as of 1/1/18. As a result, Murray decreased the exercise price of the option to from $18 to $12 per share. With the re-pricing, the fair value is now $6 per share. How much additional compensation should be recorded for 2018? How much total compensation should be recorded for 2018?
Murray Compensation, Inc. issued 100,000 employee share options on 1/1/2016. The grand-date market price is $18 per share, exercise price is also $18 per share, and the fair value of the options is $9 per share. The vesting period is 3 years. How much stock option compensation should be record for the first year (2016)? Due to the significant decrease in stock price, the fair value of the option dropped to $4 per share as of 1/1/18. As a result, Murray decreased the exercise price of the option to from $18 to $12 per share. With the re-pricing, the fair value is now $6 per share. How much additional compensation should be recorded for 2018? How much total compensation should be recorded for 2018?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Murray Compensation, Inc. issued 100,000 employee share options on 1/1/2016. The grand-date market price is $18 per share, exercise price is also $18 per share, and the fair value of the options is $9 per share. The vesting period is 3 years.
- How much stock option compensation should be record for the first year (2016)?
- Due to the significant decrease in stock price, the fair value of the option dropped to $4 per share as of 1/1/18. As a result, Murray decreased the exercise price of the option to from $18 to $12 per share. With the re-pricing, the fair value is now $6 per share. How much additional compensation should be recorded for 2018?
- How much total compensation should be recorded for 2018?
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