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Recording Market Based Stock Options Anderson Co. approved a 35,000 share option plan for executives on January 1 for the purchase of 35,000 shares of
Recording Market Based Stock Options Anderson Co. approved a 35,000 share option plan for executives on January 1 for the purchase of 35,000 shares of $1 par value common stock at $30 per share if the stock price of Anderson Co. is at least $45 a share in two years. The options vest over a two-year period (considered the requisite service period) and expire in 3 years. The company estimates the fair value of the options to be $3 per share based upon an option-pricing model. Management does not believe that it is probable that the stock price will appreciate to $45 in two years. Record compensation expense (if any) for the year. Note: If a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero)
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