Pastner Brands is a calendar-year firm with operations in several countries. As part of its executive compensation plan, at January 1, 2024, the company issued 460,000 executive stock options permitting executives to buy 460,000 shares of Pastner stock for $37 per share. One-fourth of the options vest in each of the next four years beginning at December 31, 2024 (graded vesting). Pastner elects to separate the total award into four groups (or tranches) according to the year in which they vest and measures the compensation cost for each vesting date as a separate award as given below.

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Chapter1: Financial Statements And Business Decisions
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Pastner Brands is a calendar-year firm with operations in several countries. As part of its executive compensation plan, at January 1,
2024, the company issued 460,000 executive stock options permitting executives to buy 460,000 shares of Pastner stock for $37 per
share. One-fourth of the options vest in each of the next four years beginning at December 31, 2024 (graded vesting). Pastner elects to
separate the total award into four groups (or tranches) according to the year in which they vest and measures the compensation cost
for each vesting date as a separate award as given below.
Vesting Date
December 31, 2024
December 31, 2025
December 31, 2026
December 31, 2027
Assume Pastner measures the fair value of all options on January 1, 2024, to be $5.40 per option using a single weighted-average
expected life of the options assumption.
Required:
1. Determine the compensation expense related to the options to be recorded each year 2024-2027, assuming Pastner allocates
the compensation cost for each of the four groups (tranches) separately.
2. Determine the compensation expense related to the options to be recorded each year 2024-2027, assuming Pastner uses the
straight-line method to allocate the total compensation cost.
Amount
Vesting
25%
25%
25%
25%
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Determine the compensation expense related to the options to be recorded each year 2024-2027, assuming Pastner allocates
the compensation cost for each of the four groups (tranches) separately.
Note: Enter your answers in whole dollars.
Shares Vesting at:
December 31, 2024
December 31, 2025
December 31, 2026
December 31, 2027
Total
$
2024
0 S
Compensation Expense Recorded in:
2026
2027
2025
0 S
< Required 1
0 S
120
S
0 S
Required 2 >
Total
0
0
0
0
0
Transcribed Image Text:Pastner Brands is a calendar-year firm with operations in several countries. As part of its executive compensation plan, at January 1, 2024, the company issued 460,000 executive stock options permitting executives to buy 460,000 shares of Pastner stock for $37 per share. One-fourth of the options vest in each of the next four years beginning at December 31, 2024 (graded vesting). Pastner elects to separate the total award into four groups (or tranches) according to the year in which they vest and measures the compensation cost for each vesting date as a separate award as given below. Vesting Date December 31, 2024 December 31, 2025 December 31, 2026 December 31, 2027 Assume Pastner measures the fair value of all options on January 1, 2024, to be $5.40 per option using a single weighted-average expected life of the options assumption. Required: 1. Determine the compensation expense related to the options to be recorded each year 2024-2027, assuming Pastner allocates the compensation cost for each of the four groups (tranches) separately. 2. Determine the compensation expense related to the options to be recorded each year 2024-2027, assuming Pastner uses the straight-line method to allocate the total compensation cost. Amount Vesting 25% 25% 25% 25% Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the compensation expense related to the options to be recorded each year 2024-2027, assuming Pastner allocates the compensation cost for each of the four groups (tranches) separately. Note: Enter your answers in whole dollars. Shares Vesting at: December 31, 2024 December 31, 2025 December 31, 2026 December 31, 2027 Total $ 2024 0 S Compensation Expense Recorded in: 2026 2027 2025 0 S < Required 1 0 S 120 S 0 S Required 2 > Total 0 0 0 0 0
straight-lif
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
mpens
Determine the compensation expense related to the options to be recorded each year 2024-2027, assuming Pastner uses the
straight-line method to allocate the total compensation cost.
Note: Enter your answers in whole dollars.
Compensation expense
2024
2025
< Required 1
2026
2027
Required 2 >
$
Total
0
Transcribed Image Text:straight-lif Complete this question by entering your answers in the tabs below. Required 1 Required 2 mpens Determine the compensation expense related to the options to be recorded each year 2024-2027, assuming Pastner uses the straight-line method to allocate the total compensation cost. Note: Enter your answers in whole dollars. Compensation expense 2024 2025 < Required 1 2026 2027 Required 2 > $ Total 0
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