Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2016, options were granted for 16 million $1 par common shares. The exercise price is the market price on the grant date$8 per share. Options cannot be exercised prior to January 1, 2018, and expire December 31, 2022. The fair value of the 16 million options, estimated by an appropriate option pricing model, is $1 per option.

Required:

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

2. to 5.

Prepare the appropriate journal entries to record compensation expense on December 31, 2016 and 2017. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2018, when the market price is $9 per share and the entry on December 31, 2022, when the remaining options that have vested expire. Dec 31. 2016 Record compensation expense on December 31, 2016. Dec 31.2017 Record compensation expense on December 31, 2017. March 12, 2018 Record the exercise of 75% of the options on March 12, 2018, when the market price is $9 per share. Dec 31, 2022 Record expiration of options.