Question
On January 1, 2021, Parsons Corp. granted stock options to key employees for the purchase of 84,000 shares of the company's common stock at $21
On January 1, 2021, Parsons Corp. granted stock options to key employees for the purchase of 84,000 shares of the company's common stock at $21 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2023, by the grantees still in the employ of the company. No options were terminated during 2021, but the company does have an experience of 5% forfeitures over the life of the stock options. The market price of the common stock was $27 per share at the date of the grant. Parsons Corp. used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Parsons Corp. charge to compensation expense for the year ended December 31, 2021?
Multiple Choice
$798,000.
$399,000.
$840,000.
$420,000.
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