Question
Laurels Co. sponsors a stock option incentive plan to purchase common stock for key employees. The plan allows the purchase of one share of $1
Laurels Co. sponsors a stock option incentive plan to purchase common stock for key employees. The plan allows the purchase of one share of $1 par value common stock at an option price of $30 per share. Using an option-pricing model, at the grant date the fair value of the options granted was $155,000. The options are exercisable starting two years from the date of grant which is the requisite service period. On July 1, Year One, 1,500 options were granted to employees when the market price was $30 per share. Employees exercised 1,000 options, when the market price of the stock was $45 per share on July 1, Year Three. Laurel's year ends December 31st.
Year One Year Two Year Three
What amount of compensation expense is recognized in Year One, Year Two, and Year Three?
Group of answer choices
$38,750 $77,500 $38,750
$155,000 $-0- $-0-
$51,667 $51,667 $51,666
$22,500 $45,000 $22,500
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