SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2016. The options permit holders to acquire 18 million of the companys $1 par common shares for $17 within the next six years, but not before January 1, 2019 (the vesting date). The market price of the shares on the date of grant is $19 per share. The fair value of the 18 million options, estimated by an appropriate option pricing model, is $5.1 per option.

Required:

1.	Determine the total compensation cost pertaining to the incentive stock option plan. Total compensation cost _____ million

2. & 3.

Prepare the appropriate journal entries to record compensation expense on December 31, 2016, 2017 and 2018. Record the exercise of the options if all of the options are exercised on May 11, 2020, when the market price is $20 per share. Dec 31, 2016 Record compensation expense on December 31, 2016. Dec 31, 2017 Record compensation expense on December 31, 2017. Dec 31, 2018 Record compensation expense on December 31, 2018. May 11, 2020 Record the exercise of the options if all of the options are exercised on May 11, 2020, when the market price is $20 per share.