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On October 15, 2020, the board of directors of Star Materials Corporation approved a stock option plan for executives. On January 1, 2021, 20 million
On October 15, 2020, the board of directors of Star Materials Corporation approved a stock option plan for executives. On January 1, 2021, 20 million stock options were granted, exercisable for 20 million shares of Star's $1 par common stock. The options are exercisable between January 1, 2024, and December 31, 2026, at 80% of the quoted market price on January 1, 2021, which was $15. The fair value of the 20 million options, estimated by an appropriate option pricing model, is $6 per options. Star chooses the option to recognize forfeitures only when they occur. Ten percent (2 million) of the options were forfeited when an executive resigned in 2022. All other options were exercised on July 12, 2025, when the stock's price jumped unexpectedly to $19 per share. Instructions: Answer each of the following questions by filling out the answer blanks below. There is one blank for each question. The answer for Question 1 goes in the first blank, for Question 2 in the second blank, and so on and so forth. Ensure that numerical responses are in comma format and are rounded to the nearest dollar. For example: 1; 50; 1,000; 150,000; 1,000,000; etc. Do not include symbols (i.e. $) or decimals in numerical answers. Other specific instructions might be present in the question, so make sure that you follow those as well if they are present. Failure to follow these instructions will result in answers being marked incorrect. While most answers will be numerical, some may be alphanumerical, meaning that you will include words and/or numbers. 1. Determine the total compensation cost pertaining to the stock options. 2. Determine the compensation expense for the stock option plan in 2021. 3. Determine the compensation expense for the stock option plan in 2022. 4. Determine the compensation expense for the stock option plan in 2023
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