January 2015, 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 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 if they are still employed. as of the date of the grant, management believe it is probable that the company will achieve cumulative revenue in excess of 100 million over the next three year period.

Each award has a grand - date fair value of $15. Gigabyte's valuation professionals have indicated that if the revenue target was factored in to the fair value assessment, the grant date fair value would be $12

Gigabyte adopted ASC 718. Revenue in each of the next three years was as follows:

2015: $30 million.

2016: 20 million

2017: 40 million

Required:

1. Should Gigabyte use the $12 grand date fair value or the $15 grand date fair value to measure it's compensation cost? citation from ASC is required to support the conclusion.

2. over how many years should gigabyte recognize compensation cost associated with stock options? and how much, if any, should be recognized in each off those years? the effects of forfeitures and income taxes should be ignored. citation from ASC is required to support the answer.