Question

Walls Drugs offered an incentive stock option plan to its employees. On January 1, 2016 options were granted for $84,000 $1 par common shares. The exercise price equal the $5 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2019, and expire December 31, 2020. Each option has a fair value of $1 based on an option pricing model. Which is the correct entry to record compensation exepense for the year 2016?

A.) Compensation expense:16,800; Paid in capital-stock options 16,800

B.) Compensation expense:28,000, Paid in capital-stock options 28,000

C.) Compensation expense:28,000, Common Stock 28,000

D.) Compensation expense; 112,000; Paid capital-stock options 112,000

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