Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Normandy Company granted 5 , 0 0 0 stock options to key executives when the stock price was $ 1 2 per share. The options

Normandy Company granted 5,000 stock options to key executives when the stock price was $12 per share. The options vest in 4 years, are exercisable at $12 per share for 3 years after vesting, and have a fair value of $5 per option. As of the end of the first year, Normandy believed that all the options would vest, and recorded compensation expense of $6,250. In the second year, Normandy revised its expected forfeiture rate to 10%. What will be the amount of compensation expense Normandy will record for the options in year 2?
$6,250
$5,625
$5,000
$5,417

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

13th Edition

978-0073379616, 73379611, 978-0697789938

More Books

Students also viewed these Accounting questions