On December 31, 2020, Hakuna Matata Company granted stock options to its executives. The options become exercisable on January 1, 2021, and represent compensation for the executives services over a 3-year period beginning January 1, 2021. The Black-Scholes option pricing model determines the value of the options on the grant date to be $213,000. The strike price of the options is above the market price of Hakuna Matata Companys stock (out of of the money) on the grant date. During 2021, the executives exercise 70% of the options.

Ignoring taxes, what effect does the granting and exercising of these options have on Hakuna Matata Companys net income for 2021?

($149,100)

($71,000)

$0

($213,000)