On January 1, 2024, Farmer Fabrication issued stock options for 150,000 shares to a division manager. The options have an estimated fair value of $5 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 3% in three years. Suppose that Farmer initially estimates that it is not probable the goal will be achieved, but then after one year, Farmer estimates that it is probable that divisional revenue will increase by 3% by the end of 2026 . Required: 1. What is the revised estimate of the total compensation? 2. What action will be taken to account for the options in 2025 ? 3. Prepare the journal entries to record compensation expense in 2025 and 2026. Answer is not complete. Complete this question by entering your answers in the tabs below. On January 1, 2024, Farmer Fabrication issued stock options for 150,000 shares to a division manager. The options have an estimated fair value of $5 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 3% in three years. Suppose that Farmer initially estimates that it is not probable the goal will be achieved, but then after one year, Farmer estimates that it is probable that divisional revenue will increase by 3% by the end of 2026 . Required: 1. What is the revised estimate of the total compensation? 2. What action will be taken to account for the options in 2025 ? 3. Prepare the journal entries to record compensation expense in 2025 and 2026. Complete this question by entering your answers in the tabs below. Prepare the journal entries to record compensation expense in 2025 and 2026. 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. Round your final answers to the nearest whole dollar. Journal entry worksheet inule: criler uedils deivre creals. On January 1, 2024, Farmer Fabrication issued stock options for 150,000 shares to a division manager. The options have an estimated fair value of $5 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 3% in three years. Suppose that Farmer initially estimates that it is not probable the goal will be achieved, but then after one year, Farmer estimates that it is probable that divisional revenue will increase by 3% by the end of 2026 . Required: 1. What is the revised estimate of the total compensation? 2. What action will be taken to account for the options in 2025 ? 3. Prepare the journal entries to record compensation expense in 2025 and 2026. Complete this question by entering your answers in the tabs below. Prepare the journal entries to record compensation expense in 2025 and 2026. 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. Round your final answers to the nearest whole dollar. Journal entry worksheet