Connect CSecure https//newconnect.mheducation.com/flow/connect.html Ch. 19 - Bri

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Connect CSecure https//newconnect.mheducation.com/flow/connect.html Ch. 19 - Brief Exercises (80 minutes) Help Save & Exlt Submlt Saved Check my work Brief Exercise 19-8 Performance-based options [LO19-2] 6.25 points On October 1, 2018, Farmer Fabrication issued stock options for 180,000 shares to a division manager. The options have an estimated fair value of $5 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 5% in four years. Farmer initially estimates that it is probable the goal will be achieved. eBook How much compensation will be recorded in each of the next four years? References sation each year Mc Graw Hill ?Prey 80r 16? Next> ???@) a e ^??4, 4/17/2018 8-34 PM |

Explanation / Answer

Total compensation expense = Total shares * estiamted fair value = 180000*5 = $900000

As the compensation expense is for four years so

Compensation expense per year = 900000/4 = 225000

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