Trafford Company is a calendar-year U.S. firm with operations in several countries. At January 1, 2024, the company had issued 44,000 executive stock options permitting executives to buy 44,000 shares of stock for $25. The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting). Trafford does not choose to account for the options on a straight-line basis. The fair value of the options is estimated as follows: Vesting Date Amount Vesting Fair Value per Option Issued Executive Stock 31-Dec-24 20% $5 $7 44,000 shares 40,000 31-Dec-25 30% $10 $8 Permitting Execuutive to buy shares of Stock 31-Dec-26 50% $15 $12 44,000 shares at $25 40,000 What is the compensation expense related to the options to be recorded in 2025? $66,000 $132,000 $176,000 $167,200
Trafford Company is a calendar-year U.S. firm with operations in several countries. At January 1, 2024, the company had issued 44,000 executive stock options permitting executives to buy 44,000 shares of stock for $25. The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting). Trafford does not choose to account for the options on a straight-line basis. The fair value of the options is estimated as follows: Vesting Date Amount Vesting Fair Value per Option Issued Executive Stock 31-Dec-24 20% $5 $7 44,000 shares 40,000 31-Dec-25 30% $10 $8 Permitting Execuutive to buy shares of Stock 31-Dec-26 50% $15 $12 44,000 shares at $25 40,000 What is the compensation expense related to the options to be recorded in 2025? $66,000 $132,000 $176,000 $167,200
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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| Trafford Company is a calendar-year U.S. firm with operations in several countries. | ||||||||||||||||
| At January 1, 2024, the company had issued 44,000 executive stock options permitting executives to buy 44,000 shares of stock for $25. | ||||||||||||||||
| The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting). Trafford does not choose to account for the options on a straight-line basis. | ||||||||||||||||
| The fair value of the options is estimated as follows: | ||||||||||||||||
| Vesting Date | Amount Vesting | Fair Value per Option | Issued Executive Stock | |||||||||||||
| 31-Dec-24 | 20% | $5 | $7 | 44,000 | shares | 40,000 | ||||||||||
| 31-Dec-25 | 30% | $10 | $8 | Permitting Execuutive to buy shares of Stock | ||||||||||||
| 31-Dec-26 | 50% | $15 | $12 | 44,000 | shares | at | $25 | 40,000 | ||||||||
| What is the compensation expense related to the options to be recorded in 2025? | ||||||||||||||||
| $66,000 | ||||||||||||||||
| $132,000 | ||||||||||||||||
| $176,000 | ||||||||||||||||
| $167,200 | ||||||||||||||||
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