A company offers employees a variety of share$-$based compensation plans. Under its nonqualified stock option plan, the company granted options to key officers on January $1,$ Year $1.$

The options permit holders to acquire $5$ million of the company's $$1$ par common shares for $$29$ within the next six years, but not before January $1,$ Year $4($the vesting date$).$

The market price of the shares on the date of grant is $$31$ per share.

The fair value of the $5$ million options, estimated by an appropriate option pricing model, is $$8\mathrm{.}70$ per option.

Required:

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

& $3.$ Prepare the appropriate journal entries to record compensation expense on December $31,$ Year $1,$ Year $2,$ and Year $3.$

Record the exercise of the options if all of the options are exercised on May $11,$ Year $5,$ when the market price is $$32$ per share.

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

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

Note: Enter your answer in millions rounded to $1$ decimal place $($i$.$e$.,5,500,000$ should be entered as $5\mathrm{.}5).$

Total compensation cost

million