Thank you.

1/ Pastore Inc. granted options for 1 million shares of its $1 par common stock at the beginning of the current year. The exercise price is $28 per share, which was also the market value of the stock on the grant date. The fair value of the options was estimated at $9.50 per option. If the options have a vesting period of five years, what would be the balance in "Paid-in CapitalStock Options" three years after the grant date?

• A credit of $5.7 million.

• A credit of $15.8 million.

• A debit of $5.7 million.

• A debit of $15.8 million.

2/ On January 1, 2021, Red Inc. issued stock options for 240,000 shares to a division manager. The options have an estimated fair value of $7 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 5% in three years. Red initially estimates that it is probable the goal will be achieved. Ignoring taxes, what is compensation expense for 2021? (Round your answer to the nearest dollar amount.) $ 0, $ 240,000, $ 560,000, $ 1,680,000.