On January 1, 2021, Sheridan Company granted Sam Wine, an employee, an option to buy 1,000 shares of Sheridan Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $5340. Wine exercised his option on October 1, 2021 and sold his 1,000 shares on December 1, 2021. Quoted market prices of Sheridan Co. stock in 2021 were: $28 per share $34 per share December 1 $38 per share July 1 October 1 The service period is for three years beginning January 1, 2021. As a result of the option granted to Wine, using the fair value method, Sheridan should recognize compensation expense for 2021 on its books in the amount of O $0. O$1780. O$1335. O $5340.
On January 1, 2021, Sheridan Company granted Sam Wine, an employee, an option to buy 1,000 shares of Sheridan Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $5340. Wine exercised his option on October 1, 2021 and sold his 1,000 shares on December 1, 2021. Quoted market prices of Sheridan Co. stock in 2021 were: $28 per share $34 per share December 1 $38 per share July 1 October 1 The service period is for three years beginning January 1, 2021. As a result of the option granted to Wine, using the fair value method, Sheridan should recognize compensation expense for 2021 on its books in the amount of O $0. O$1780. O$1335. O $5340.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:On January 1, 2021, Sheridan Company granted Sam Wine, an employee, an option to buy 1,000 shares of Sheridan Co. stock for $30
per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is
determined to be $5340. Wine exercised his option on October 1, 2021 and sold his 1,000 shares on December 1, 2021. Quoted
market prices of Sheridan Co. stock in 2021 were:
$28 per share
$34 per share
December 1 $38 per share
July 1
October 1
The service period is for three years beginning January 1, 2021. As a result of the option granted to Wine, using the fair value method,
Sheridan should recognize compensation expense for 2021 on its books in the amount of
$0.
$1780.
$1335.
$5340.
10
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