On january 1, 2018, farmer fabrication issued stock options for 100,000 shares to a division manager. the options have an estimated fair value of $6 each. to provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 5% in three years. suppose that farmer initially estimates that it is not probable the goal will be achieved, but then after one year, farmer estimates that it is probable that divisional revenue will increase by 5% by the end of 2020. required: 1. what is the revised estimate of the total compensation? 2. what action will be taken to account for the options in 2019? 3. prepare the journal entries to record compensation expense in 2019 and 2020.

Vortex company operates a retail store with two departments. information about those departments follows. department a department b sales $ 800,000 $ 450,000 cost of goods sold 497,000 291,000 direct expenses salaries 125,000 88,000 insurance 20,000 10,000 utilities 24,000 14,000 depreciation 21,000 12,000 maintenance 7,000 5,000 the company also incurred the following indirect costs. salaries $36,000 insurance 6,000 depreciation 15,000 office expenses 50,000 indirect costs are allocated as follows: salaries on the basis of sales; insurance and depreciation on the basis of square footage; and office expenses on the basis of number of employees. additional information about the departments follows. department square footage number of employees a 28,000 75 b 12,000 50 required: 1. determine the departmental contribution to overhead and the departmental net income for department a and department b.