The Santiago Corporation provides an executive stock option plan. Under the plan, the company granted options on January 1, 2021, that permit executives to acquire 70 million of the company's $1 par value common shares within the next eight years, but not before December 31, 2024 (the vesting date). The exercise price is the market price of the shares on the date of the grant, $27 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the options. 2. & 3. Prepare the appropriate journal entries (if any).

Record the award of options that permit executives to acquire 70 million common shares at $1 par under an executive stock option plan on January 1, 2021.

January 1, 2021.

Record compensation expense for the award of options that permit executives to acquire 70 million common shares at $1 par within the next eight years, but not before December 31, 2024 on December 31, 2021 when fair value of the options is $4 per option.

December 31, 2021