Question
Pastore Inc. granted options for 1 million shares of its $1 par common stock at the beginning of the current year. The exercise price is
Pastore Inc. granted options for 1 million shares of its $1 par common stock at the beginning of the current year. The exercise price is $28 per share, which was also the market value of the stock on the grant date. The fair value of the options was estimated at $5.50 per option. If the options have a vesting period of five years, what would be part of the journal entry to record the compensation expense for the third year (after the grant date)?
A) a debit of $1.1 million.
B) a debit of $3.3 million.
C) a debit of $5.4 million.
D) a debit of $16.2 million.
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