Red Company is a calendar-year U.S. firm with operations in several countries. At January 1, 2013, 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 2014?
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, 2013, 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 2014?
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, 2013, 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 2014?
A)$48,000. 
B)$96,000. 
C)$128,000. 
D)$140,000.

Red Company Is a Calendar-Year U