On January 1, 2018, M Company granted 90,000 stock options tocertain executives. The options are exercisable no sooner thanDecember 31, 2020, and expire on January 1, 2024. Each optioncan be exercised to acquire one share of $1 par common stock for$12. An option-pricing model estimates the fair value of theoptions to be $5 on the date of grant.If unexpected turnover in 2019 caused the company toestimate that 15% of the options would be forfeited, whatamount should M recognize as compensation expense for2019?

1 Compute the amount to be recognized as compensation for 2019 as follows: Compensation expense =…

Answered: On January 1, 20 ertain executive…

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Accounting

On January 1, 20 ertain executive December 31, 20 an be exercised An option-n 12

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On January 1, 2018, M Company granted 90,000 stock options to
certain executives. The options are exercisable no sooner than
December 31, 2020, and expire on January 1, 2024. Each option
can be exercised to acquire one share of $1 par common stock for
$12. An option-pricing model estimates the fair value of the
options to be $5 on the date of grant.
If unexpected turnover in 2019 caused the company to
estimate that 15% of the options would be forfeited, what
amount should M recognize as compensation expense for
2019?

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