Answered: what is the compensation expense…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Yellow Company is a calendar-year firm with operations in several countries. At January 1, 2021, the company had issued 40,000 executive stock options permitting executives to buy 40,000 shares of stock for $30. The vesting schedule is 25% the first year, 25% the second year, and 50% the third year (graded-vesting). The fair value of the options is estimated as follows:

Vesting Date	Amount Vesting	Fair Value per Option
Dec. 31, 2021		25	%	$	6
Dec. 31, 2022		25	%	$	7
Dec. 31, 2023		50	%	$	9

Assuming Yellow prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), what is the compensation expense related to the options to be recorded in 2022?

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