On January 1, 2013, Korn Corp. granted an employee an option to purchase 6,000 s

Question

On January 1, 2013, Korn Corp. granted an employee an option to purchase 6,000 shares of Korn's $2 par common stock at $22 per share. The options became exercisable on December 31, 2014, after the employee completed two years of service. The option was exercised on January 10, 2015. The market prices of Korn's stock were as follows: January 1, 2013, $35; December 31, 2014, $57; and January 10, 2015, $47. An option pricing model estimated the value of the options at $7 each on the grant date. For 2013, Korn should recognize compensation expense of:

Explanation / Answer

Recognize Compensation expenses is 6000*47 =        282,000 Less: Option Price 7*6000 =          42,000 Net Compensation Expenses $240000

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.