Question
On July 1, 2017, Hobson Fencing granted compensatory stock options for 10,000 shares of its $24 par value common stock to key employees. On the
On July 1, 2017, Hobson Fencing granted compensatory stock options for 10,000 shares of its $24 par value common stock to key employees. On the date the stock options were granted, the market price of the common stock was $31 per share. Using a fair value option pricing model, Hobson determined that the total compensation expense would be $32,000 for the stock options. The options are exercisable beginning January 1, 2018to all employees who still work for the company. The options expire on June 30, 2019. On January 2, 2018, all stock options were exercised; the market price of the stock at the time was $36 per share. If the service period is for two years beginning January 1, 2017, how much compensation expense should Hobson Fencing record on December 31, 2017if they use the fair value method?
A : $ 7,500.
B : $ 0.
C : $16,000.
D : $32,000.
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