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On January 1, 2018, Farmer Fabrication issued stock options for 120,000 shares to a division manager. The options have an estimated fair value of $4
On January 1, 2018, Farmer Fabrication issued stock options for 120,000 shares to a division manager. The options have an estimated fair value of $4 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 2% in three years. Suppose that after one year, Farmer estimates that it is not probable that divisional revenue will increase by 2% in three years. 1. What is the revised estimate of the total compensation? 2. What action will be taken to account for the options in 2019? & Answer is complete but not entirely correct. Estimated total compensation 160.000 What action will be taken to account for the options in 2019? Farmer will reverse the 2018 recorded compensation
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