On January 1, 2024, Adams-Meneke Corporation granted 20 million incentive stock options to division managers, each permitting holders to purchase one share of the companys $1 par common shares within the next six years, but not before December 31, 2026 (the vesting date).

• The exercise price is the market price of the shares on the date of grant, currently $48 per share.
• The fair value of the options, estimated by an appropriate option pricing model, is $3 per option.
• Managements policy is to estimate forfeitures.
• No forfeitures are anticipated.
• Ignore taxes.

Required:

1. Determine the total compensation cost pertaining to the options on January 1, 2024.
2. Prepare the appropriate journal entry to record compensation expense on December 31, 2024.
3. Unexpected turnover during 2025 caused an estimate of the forfeiture of 5% of the stock options. Prepare the appropriate journal entry(s) on December 31, 2025 and 2026 in response to the new estimate.

On January 1, 2024, Adams-Meneke Corporation granted 20 million incentive stock options to division managers, each permitting holders to purchase one share of the company's $1 par common shares within the next six years, but not before December 31 , 2026 (the vesting date). - The exercise price is the market price of the shares on the date of grant, currently $48 per share. - The fair value of the options, estimated by an appropriate option pricing model, is $3 per option. - Management's policy is to estimate forfeitures. - No forfeitures are anticipated. - Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the options on January 1, 2024. 2. Prepare the appropriate journal entry to record compensation expense on December 31, 2024. 3. Unexpected turnover during 2025 caused an estimate of the forfeiture of 5% of the stock options. Prepare the appropriate Journal entry(s) on December 31,2025 and 2026 in response to the new estimate. Complete this question by entering your answers in the tabs below. Unexpected turnover during 2025 caused an estimate of the forfelture of 5% of the stock options. Prepare the appropriate journal entry(s) on December 31,2025 and 2026 in response to the new estimate. Note: if no entry is required for a transaction/event, select "No journal entry required" in the first account field, Do not round intermediate calculations. Enter your answers in milions rounded to 1 decimal places (i.e., 5,500,000 should be entered as 5,50 )