Chapter 15, Problem 24RP

Don't use ai to answer I will report you answer. Please give explanation for both correct options and incorrect

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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 480,000 executive stock options permitting executives to buy 480,000 shares of Pastner stock for $38 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. The fair value of each tranche is estimated at January 1, 2024, as follows: Vesting Date Amount Fair Value Vesting per Option: December 31, 2024 25% $ 3.90 December 31, 2025 25% $ 4.40 25% $ 4.90 25% $ 5.40 December 31, 2026 December 31, 2027 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…