On November 1, 2014, Olympic Company adopted a share-option plan that granted options to key executives to purchase 40,000 shares of the company’s

£10 par value ordinary shares. The options were granted on January 2, 2015, and were vested 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at £40, and the fair value option-pricing model determines the total compensation expense to be £600,000.

All of the options were exercised during the year 2017: 30,000 on January 3 when the market price was

£67, and 10,000 on May 1 when the market price was £77 a share.

Instructions Prepare journal entries relating to the share-option plan for the years 2015, 2016, and 2017. Assume that the employees perform services equally in 2015 and 2016.