
EBK PRINCIPLES OF ELECTRIC CIRCUITS
10th Edition
ISBN: 9780134880068
Author: Buchla
Publisher: VST
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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…
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