On December 31, 2017, Sheffield Corp. granted some of its executives options to purchase 186000 shares of the company's $10 par common stock at an option price of $40 per share. The Black-Scholes option pricing model determines total compensation expense to be $1346700. The options become exercisable on January 1, 2018, and represent compensation for executives' services over a three-year period beginning January 1, 2018. At December 31, 2018 none of the executives had exercised their options. What is the impact on Sheffield's net income for the year ended December 31, 2018 as a result of this transaction under the fair value method?

$1346700 decrease.

$0.

$ 448900 increase.

$ 448900 decrease.