1. Assume that Macro Corp. issued 60,000 stock options on January 1, 2020. Each option was for the right to purchase 1 share of $1 par common stock at $60 per share (the market price of the shares on the issue date). At the issuance date, the options fair value was $10 per option. The options have a 4-year vesting period and a 10-year life.

Instructions

1. Prepare the entry to recognize 2020s compensation expense related to the options granted.
2. Assume that the average market price of Macros common stock was $80 for 2020. Using the treasury stock method, determine how many shares would be added in calculating 2020s diluted EPS for this potentially dilutive security.