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Sunrise Company uses stock options as a major compensation incentive for its top executives. On January 1 , 2 0 2 4 , one million
Sunrise Company uses stock options as a major compensation incentive for its top executives. On January one million options were granted. Each option gives the holder the right to acquire one $ par common share. Assume the following:
The exercise price is the market price on the grant date $ per common share.
Options vest on January They cannot be exercised before that date, and the options expire on December
The fair value of each option, estimated by an appropriate option pricing model, is $ per option.
Assume all compensation expense from the stock options is properly recorded. If of the options expire on without being exercised, the journal entry to record the expiration of these options ignoring income tax effects would includd:
A A credit to PaidinCapitalCommon Stock for $ million.
B A debit to Common Stock for $
C A debit to PaidinCapitalStock Options for $ million.
D A debit to PaidinCapitalExpired Stock Options for $ million.
E None of these answer choices are correct.
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