Refer to the situation described in Problem 19-2. Assume Pastner measures the fair value of all options

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Refer to the situation described in Problem 19-2. Assume Pastner measures the fair value of all options on January 1, 2011, to be $4.50 per option using a single weighted-average expected life of the options assumption.

Required:
1. Determine the compensation expense related to the options to be recorded each year 2011–2014, assuming Pastner allocates the compensation cost for each of the four groups (tranches) separately.
2. Determine the compensation expense related to the options to be recorded each year 2011–2014, assuming Pastner uses the straight-line method to allocate the total compensation cost.

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Intermediate Accounting

ISBN: 978-0077400163

6th edition

Authors: J. David Spiceland, James Sepe, Mark Nelson

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