Problem 1 (10 Points) On October 15, 2020, the board of directors of ABC Corporation approved a stock option plan for key executives. On January 1, 2021, 20 million stock options were granted, exercisable for 20 million shares of Ensor'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 option. Ensor 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. Required: 1. When is ABC's stock option measurement date? January 1st,2021 2. Determine the compensation expense for the stock option plan in 2021. (Ignore taxes.) ( $20 million x$6 per option) /3 years =$40 million 3. Prepare the journal entries to reflect the effect of forfeiture of the stock options on Ensor's financial statements for 2022 and 2023. 4. Is this effect consistent with the general approach for accounting for changes in estimates? Explain. 5. Prepare the journal entry to account for the exercise of the options in 2025