On January 1, 2016, M Company granted 90,000 stock options to certain executives. The options...
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Accounting
On January 1, 2016, M Company granted 90,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2018, and expire on January 1, 2022. Each option can be exercised to acquire one share of $1 par common stock for $12. An option-pricing model estimates the fair value of the options to be $5 on the date of grant. If unexpected turnover in 2017 caused the company to estimate that 10% of the options would be forfeited, what amount should M recognize as compensation expense for 2017?
$30,000.
$60,000.
$120,000.
$150,000.
Answer: (90,000 5 = $450,000; $450,000 90% = $405,000 2/3 = $270,000; $270,000 - 150,000 = $120,000
Please show how did they get 150,000?
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