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On December 21, Year 1, the board of directors of Oak Corporation approved a plan to award 600,000 share options to 20 key employees as
On December 21, Year 1, the board of directors of Oak Corporation approved a plan to award 600,000 share options to 20 key employees as additional compensation. Effective January 1, Year 2, each employee was granted the right to purchase 30,000 shares of the company's $2 par-value stock at an exercise price of $36 per share. The market price on that date was $32 per share. All share options vest at December 31, Year 4, the end of the 3-year requisite service period. They expire on December 31, Year 11. Based on an appropriate option-pricing formula, the fair value of the options on the grant date was estimated at $12 per option. On January 1, Year 3, five key employees left Oak Corporation. What amount of compensation expense should Oak report in the income statement for the year ended December 31, Year 3? $3,600,000 55,400,000 $1.200.000 $2,400,000
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