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On January 1, 2021, Farmer Fabrication issued stock options for 360,000 shares to a division...

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Accounting

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On January 1, 2021, Farmer Fabrication issued stock options for 360,000 shares to a division manager. The options have an estimated fair value of $8 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 2% in five years. Suppose that after one year, Farmer estimates that it is not probable that divisional revenue will increase by 2% in five years. Required: 1. What is the revised estimate of the total compensation? 2. What action will be taken to account for the options in 2022? 3. What journal entry will be needed to account for the options in 2022? Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 What is the revised estimate of the total compensation and what action will be taken to account for the options in 2022? 1. Estimated total compensation 2. What journal entry will be needed to account for the options in 2022? og and Reco

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