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Elgin Homes, Ltd. granted options at the beginning of the current year to all its salaried employees. At the grant date, the options had a

Elgin Homes, Ltd. granted options at the beginning of the current year to all its salaried employees. At the grant date, the options had a fair value of $870,000 and can be exercised only over a 3-year vesting period. At the end of the year, Elgin charged $290,000 to expense, assuming that all employees would vest. Prepare the journal entry to record the compensation expense for Year 2 assuming that Elgin expects only 40% of employees to vest. Assume that Elgin chooses to adjust the fair value for the estimated forfeitures.

(Record debits first, then credits. Exclude explanations from any journal entries. If no entry is required select "No Entry Required" on the first line of the journal entry table and leave all remaining cells in the table blank.)

Account

December 31, Year 2

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