ABC Company grants the companys top 5 executives stock options for a total of 10,000 shares ($1 par) with a current FMV of $60 and an option price of $50. Using an acceptable fair value option pricing model, the total compensation expense is $200,000 and the allocation period is 2 years.

a) Prepare the journal entry at the grant date:

b) Prepare the journal entry at the end of Year 1 to record compensation expense:

c) Prepare the journal entry at the end of Year 2 to record compensation expense:

d) Prepare the journal entry in Year 3 at the exercise of 2,000 (20%) of the options:

Extra credit:(2 points) 1) Using the information provided in Problem 15, prepare the journal entry in Year 3 at the expiration of the remaining 8,000 options, assuming all employees satisfied employment requirements.