A company offers an Incentlve stock option plan to its regional managers. On January $1,$ Year $1,$ optlons were granted for $80$ million $$1$

par common shares.

The exercise price is the market price on the grant date$-$ $$7$ per share.

Options cannot be exercised prior to January $1,$ Year $3,$ and expire December $31,$ Year $7.$

The fair value of the $80$ million options, estimated by an approprlate option pricing model, is $$1$ per option.

Required:

Determine the total compensation cost pertaining to the incentlve stock option plan.

to $5.$ Prepare the approprlate journal entrles to record compensation expense on December $31,$ Year $1$ and Year $2.$ Prepare the

approprlate journal entry to record the exercise of $75\%$ of the options on March $12,$ Year $3,$ when the market price is $$8$ per share and

the entry on December $31,$ Year $7,$ when the remaining options that have vested expire without belng exercised.

Complete this question by entering your answers in the tabs below.

Req $1$

Req $2$ to $5$

Determine the total compensation cost pertaining to the incentive stock option plan.

Note: Enter your answer in millions $($i$.$e$.,10,000,000$ should be entered as $10).$

Total compensation cost