Chapter 19, Problem 19.1E

To determine

To prepare: The journal entries for the recording of compensation expense over the vesting period.

Given information:

Number of shares as an option is 100,000.

Par value of the common stock is $1.20.

Exercise price per share is $4.80.

Total option time period is 5 years.

Estimated fair value at the grant date is $850,000 $\left(100,000\text{ shares}\times \$8.5\text{ per share}\right)$ .

Initial vesting probability is 100%.