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On January 1, 2020, Company A issued stock options for 828 shares to a executive. The options have an estimated fair value of $9 each.

On January 1, 2020, Company A issued stock options for 828 shares to a executive. The options have an estimated fair value of $9 each. To provide additional incentive for managerial achievement, the options are not exercisable unless Company A's stock price increases by 5% in six years. Company A initially estimates that it is not probably the goal will be achieved.

How much compensation will be recorded in 2020?

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$2,484

No compensation should be recorded because it is not probable the goal will be achieved.

$7,452

$1,242

20

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