Problem #$2$

Traditional Stock Option Plan $-$ Graded Vesting

On January $2,2023,$ the Life Science Corporation granted $9,000$ stock options allowing employees to purchase $9,000$ shares of the company's common stock at $$50$ per share. A third of the options vest at the end of each of the next three years $($i$.$e$.,$ a third will vest at the end of $2023).$ The company treats each tranche as a separate award based on the vesting date. The fair values of the options that vest at the end of $2023-2025$ are $$5\mathrm{.}00,$$$6\mathrm{.}00,$ and $$8\mathrm{.}00,$ respectively.

REQUIRED:

Calculate compensation expense for Life Science during $2023-2025.$

Prepare the journal entries for $2023-2025.$