Business, 12.03.2020 03:12 lambobacon9027

Fact Pattern: On December 21, Year 1, the board of directors of Oak Corporation approved a plan to award 600,000 share options to 20 key employees as additional compensation. Effective January 1, Year 2, each employee was granted the right to purchase 30,000 shares of the company’s $2 par-value stock at an exercise price of $36 per share. The market price on that date was $32 per share. All share options vest on December 31, Year 4, the end of the 3-year requisite service period. They expire on December 31, Year 11. Based on an appropriate option-pricing formula, the fair value of the options on the grant date was estimated at $12 per option.

What amount of compensation expense should Oak Corporation recognize in its annual income statement for the year ended December 31, Year 2?

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Fact Pattern: On December 21, Year 1, the board of directors of Oak Corporation approved a plan to a...

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