Q1. Use the following information to answer Q1 a, b, & c. (one mark for each wholly correct answer).

Pittsburg Steel granted its key executives 50,000 share options for services to be rendered over a three-year period commencing Jan 1, 2018. The option price was $20 per share, and the market price was $13. The options could be exercised in 3 years commencing Jan 1, 2021. An option pricing model determined total compensation expense to be 900,000. The par value of these shares was $2.

Provide the appropriate journal entries for the following dates and cases

1a	Dec 31, 2018		Dr.	Cr.

Case One - Assume the market price was low and options were not exercised

1b.	Jan 1, 2021		Dr.	Cr.

Case Two - Assume the options were exercised

1c.	Jan 5, 2021		Dr.	Cr.

Q2. Refer to the information given in Q1 above to answer Q2. (one mark for each wholly correct answer).

2a. Clearly EXPLAIN the effect on Pittsburgs financial statements when the options were exercised on Jan 5, 2021.

2b. When the options were exercised on Jan 5, 2021 the market price of the shares was $30. It was previously $13.

CRITICALLY assess the view that the increased share price means that the share options had effectively motivated the executives.