On Jan 1, 2020, Nessa Corporation granted nontransferable options to certain key employees. The options permit the purchase of 10,000 shares of Nessas common stock at a price of $40 per share. On Jan 1, 2020, the stocks market value was $40 per share and Nessa estimates that each option has a fair value of $7. The options were fully vested and exercisable beginning January 1, 2022 (i.e., a two-year vesting period) and they expire on December 31, 2025. On Jan 1, 2020, Nessa estimates that 70% of the options will vest. Ignore income taxes. On Dec 31, 2021, 80% of the employees completed the service requirement and become fully vested. The fair value of the options on Dec 31, 2021 is $9. On January 1, 2022, 8,000 of the options were exercised when the price was $48 per share. 1. What is the intrinsic value of each option on Jan 1, 2020? 2. What is the fair value of each option on Jan 1, 2021? 3. What journal entries would Nessa make in 2020, 2021, and 2022 to record the stock option activity?