Olde Corporation provides an executive stock option plan. Under the plan, the company granted options on January $1,2024,$ that permit executives to acquire $2$ million of the company's $$1$ par value common shares within the next five years, but not before December $31,2025($the vesting date$).$ The exercise price is the market price of the shares on the date of the grant, $$14$ per share. The fair value of the options, estimated by an appropriate option pricing model, is $$2$ per option. No forfeitures are anticipated. Ignore taxes.

Required:

$1.$ Determine the total compensation cost pertaining to the options, assuming the fair value approach has been selected.

$2.$ Prepare the appropriate journal entry to record the award of the options on January $1,2024.$

$3.$ Prepare the journal entry to record compensation expense on December $31,2024.$

$4.$ Prepare the journal entry to record compensation expense on December $31,2025.$