NTING Ch. 19 Homework value 10.00 points s for 320,000 shares to a division mana

Question

NTING Ch. 19 Homework value 10.00 points s for 320,000 shares to a division manager. additional incentive for managerial On October 1, 2016, Farmer Fabrication issued stock option The options have an estimated fair value of $8 each. To provide achievement, the options are not exercisable unless divisional revenue increases by 4% n fveyears. Famer initially estimates that it is probable the goal will be achieved How much compensation will be recorded in each of the next five years? each year References eBook & Resources Worksheet Difficulty: 1 Easy

Explanation / Answer

Total compensation = Number of stock options x Fair value of each option = 320,000 x $8 = $2,560,000

Compensation for each year = Total compensation/Number of years = $2,560,000/5 = $512,000

Therefore, answer is $512,000.

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

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