Ask Question
14 July, 15:44

Weiser Corp. on January 1, 2012, granted stock options for 40,000 shares of its $10 par value common stock to its key employees. The market price of the common stock on that date was $23 per share and the option price was $20. The Black-Scholes option pricing model determines total compensation expense to be $420,000. The options are exercisable beginning January 1, 2015, provided those key employees are still in Weiser's employ at the time the options are exercised. The options expire on January 1, 2016.

On January 1, 2015, when the market price of the stock was $29 per share, all 40,000 options were exercised. The amount of compensation expense Weiser should record for 2015 under the fair value method is

a. $70,000.

b. $210,000.

c. $140,000.

d. $0.

+1
Answers (1)
  1. 14 July, 17:18
    0
    The Correct answer is: (c) $140000

    Explanation:

    Workings:

    (i) Total Compensation expense = $ 4,20,000

    (ii) Vesting Period = 3 years

    (i) / (ii) Compensation expense per year = $ 1,40,000

    Therefore, Compensation expense for 2015 = $ 1,40,000 Comment
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Weiser Corp. on January 1, 2012, granted stock options for 40,000 shares of its $10 par value common stock to its key employees. The market ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers