On January 1, 2021, Wobble Company adopted a compensatory stock option plan and granted its managers 10,000 options to buy shares of common stock; each option can be used to acquire a share of common stock at a price of $20 a share. The fair value of each option was $5.00 on January 1, 2021. The options can be converted into common stock after July 1, 2021. The required service period is four years. How much compensation expense will be recorded for the year ending December 31, 2023 using the fair value approach to accounting for stock options? O A. SO O B. $12,500 O C. $50.000 O D. $200,000

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On January 1, 2021, Wobble Company adopted a compensatory stock option plan and granted its managers 10,000 options to buy shares of common stock; each option can be used to acquire a share of common
stock at a price of $20 a share. The fair value of each option was $5.00 on January 1, 2021. The options can be converted into common stock after July 1, 2021. The required service period is four years. How
much compensation expense will be recorded for the year ending December 31, 2023 using the fair value approach to accounting for stock options?
O A. $0
O B. $12,500
OC. 550,000
O D. $200,000
Transcribed Image Text:On January 1, 2021, Wobble Company adopted a compensatory stock option plan and granted its managers 10,000 options to buy shares of common stock; each option can be used to acquire a share of common stock at a price of $20 a share. The fair value of each option was $5.00 on January 1, 2021. The options can be converted into common stock after July 1, 2021. The required service period is four years. How much compensation expense will be recorded for the year ending December 31, 2023 using the fair value approach to accounting for stock options? O A. $0 O B. $12,500 OC. 550,000 O D. $200,000
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