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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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