on january 2010, gigabyte inc granted 10,000 "at the money" employee stock options (i.E the exercise price was equal to the stock price on the grand date.) to allign the compensation of the employees with financial performance of the company, the award will vest only if cumulative revenie over the following three year reporting period is greater than $100 million and if they are still employeed. as of the dte of the grant, management believe it is probable that the conpany will achieve cumulative revenue in excess of 100 million over the next three year period.

Each award has a grand - date fair value of $15. Gigabyte's valuation professionals have indicated that if the revenue target was factored in to the fair value assestment, the grand date fair value would be $10..

gigabyte adopted ASC 718.

Revenue in each of the next three years was as follows:

2010 : $30 million.

2011: 30 million

2012

required:

1. should gigabyte use the $10 grand date fair value or the $15 grand date fair value to measure it's compensation cost? citation from ASC is required to suppurt the conclusion.

2. over how many years should gigagbyte recognize compensation cost associated with stock options? and how much, if any, should be recognized in each off hose years? the effects of forefeitures and income taxes should be ignored. citation from ASC is required to support the answr.

3. how would the year 2 accounting change if management determined that the performance condition of cumulative revnue in excess of $100 million over the three year period was improbable of achieving on Dec 31, 2011? what would be the cumulative amount of compensation cost recognized? Citation from ASC is required to support your conclusion.