Gigabyte On January 1 , 2010 , Gigabyte Inc . granted 10 , 000 " at - the - money " employee stock options ( i.e ., the exercise price was equal to the stock price on the grant date ) . To align the compensation of the employees with the financial performance of the company , the award will vest only if cumulative* revenue over the following three - year reporting period is greater than $100 million and the employees are still employed by Gigabyte . As of the date of the grant , management believes it is probable that the company will achieve cumulative revenue in excess of $100 million over the following three - year period . Each award has a grant- date fair value of $15 . Gigabyte's valuation professionals have indicated that $12 . if the revenue target was factored into the fair value assessment , the grant- date fair value would be Gigabyte adopted ASC 718 , Compensation - Stock Compensation Revenue in each of the next three years was as follows :" 2010: $30 million 2011 : $20 million 2012 : $50 million Required :" . Should Gigabyte use the $ 12 grant- date fair value or the $15 grant- date fair value to measure it's compensation cost ? Citation from ASC is required to support your conclusion . 2 . Over how many years should Gigabyte recognize compensation cost associated with the stock options , and how much , if any , should be recognized in each of those years ? The effects of forfeitures and income taxes should be ignored . Citation from ASC is required to support your conclusion . 3 . In the end of Year 2 , due to poor earnings , the stock price of Gigabyte has fallen significantly . Management determined that the performance condition of cumulative revenue in excess of $100 million over the three - year period was improbable of achievement . Management decided to modify the terms of the options by decreasing the exercise price on the stock options to $10 and lower the vesting performance condition of cumulative revenue in excess of $100 million to $80 million over the three - year period . These downward adjustments were made in order to ensure that the options continue to provide intended motivational benefit to employees . Immediately prior to the modification of the terms , the fair value was $ 1 per option . After considering the impact of the modification , the fair value was $7 per option . As a result of the modification , what would be the compensation expert for 201 1 and 2012 ? Citation from ASC is required to support your conclusion