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On January 1, 2021, Ellison Company granted Sam Wine, an employee, an option to buy...

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Accounting

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On January 1, 2021, Ellison Company granted Sam Wine, an employee, an option to buy 1,000 shares of Ellison Co. stock for $30 per share the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $6,000. Wine exercised his option on October 1, 2021 and sold his 1,000 shares on December 1, 2021. Quoted market prices of Ellison Co. stock in 2021 were: 5 July 1 $30 per share October 1 $36 per share December 1 $40 per share The service period is for three years beginning January 1, 2021. As a result of the option granted to Wine, using the fair value method, Ellison should recognize compensation expense for 2021 on its books in the amount of .8 a) $6,000 21 b) $2,000 c) $1,500 d) so

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