On January 2, Year 1, Argy Company's board of directors granted 12,000 stock options to a select group of senior employees. The requisite service period is three years, with one-third of the options vesting at the end of each calendar year (graded vesting). An option-pricing model was used to calculate a fair value of $5 for each option on the grant date. The company assumes all 12,000 options will vest (i.e., there will be no forfeitures).
Determine the amount to be recognized as compensation expense in Year 1, Year 2, and Year 3 under
(b) U.S. GAAP.
Prepare the necessary journal entries.
This question was answered on: Jul 11, 2017
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