verview: SaulGroup, Inc., a U.S.-based corporation, currently uses U.S. GAAP to prepare its consolidated financial statements. SaulGroup is considering switching to IFRS and asking for your help in assessing the impact this change will have on its financial statements. SaulGroup's accounting principles differ from IFRS in the following areas- restructuring, pension plan, stock options, revenue recognition, and bonds payable. Instructions: respond to the following questions in each scenario:

3.Stock Options

On January 1, 2017, SaulGroup, Inc. granted 2,000 stock options to its senior employees. The options vest in equal installments over three years with 1/3 vest in 2017, 1/3 in 2018, and 1/3 in 2019. The company is experiencing the cost of the options on a straight-line basis over the three-year period at $20,000 per year (2,000 options x $30 / 3 = $20,000)

a.How is the amount of compensation expense treated in 2017 and subsequent years under (1) U.S. GAAP and (2) IFRS?

b. Prepare the necessary journal entries.