On January 1, 2015, Magilla Inc. granted share options to officers and key employees for the purchase of 20,000 of the company’s €10 par ordinary shares at €25 per share. The options were exercisable within a 5-year period beginning January 1, 2017, by grantees still in the employ of the company, and expiring December 31, 2021. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be €400,000.

On April 1, 2016, 3,000 options were forfeited when the employees resigned from the company. The market price of the ordinary shares was €35 per share on this date.

On March 31, 2017, 12,000 options were exercised when the market price of the ordinary shares was

€40 per share.

Instructions Prepare journal entries to record issuance of the share options, forfeiture of the share options, exercise of the share options, and charges to compensation expense, for the years ended December 31, 2015, 2016, and 2017.