Red Company is a calendar-year U.S.firm with operations in several countries.At January 1,2016,the company had issued 40,000 executive stock options permitting executives to buy 40,000 shares of stock for $25.The vesting schedule is 20% the first year,30% the second year,and 50% the third year (graded-vesting).The fair value of the options is estimated as follows:
What is the compensation expense related to the options to be recorded in 2017?
A)$ 48,000.
B)$ 96,000.
C)$128,000.
D)$140,000.

Question

Red Company is a calendar-year U.S.firm with operations in several countries.At January 1,2016,the company had issued 40,000 executive stock options permitting executives to buy 40,000 shares of stock for $25.The vesting schedule is 20% the first year,30% the second year,and 50% the third year (graded-vesting).The fair value of the options is estimated as follows: 
What is the compensation expense related to the options to be recorded in 2017?
A)$ 48,000. 
B)$ 96,000. 
C)$128,000. 
D)$140,000.

Quizplus · Accepted Answer

The Answer of Red Company is a calendar-year U.S.firm with operations in several countries.At January 1,2016,the company had issued 40,000 executive stock options permitting executives to buy 40,000 shares of stock for $25.The vesting schedule is 20% the first year,30% the second year,and 50% the third year (graded-vesting).The fair value of the options is estimated as follows: 
What is the compensation expense related to the options to be recorded in 2017?
A)$ 48,000. 
B)$ 96,000. 
C)$128,000. 
D)$140,000.

Red Company Is a Calendar-Year U