The Ageless Child, Inc. (“TAC” or “the Company”) is a publiccompany that sells children’s fashions and educational toys andgames. As an incentive to its employees, TAC established acompensation incentive plan in which a total of 100,000 optionswere granted on January 1, 2019. TAC’s stock price was $15.00 pershare on that date. 718-20-55-10 The significant terms of theincentive plan are as follows: • The options have a $15.00 “strike”or exercise price. • For the options to vest, the following mustoccur: o The employee must continue to provide service to theCompany throughout the entire explicit service period of five years(i.e., a five-year “cliff-vesting” award). o TAC must achieveannual sales of at least $20 million during the fifth year (2023)of the explicit service period. o TAC’s share price must increaseby at least 25% over the five-year explicit service period. • Inaddition, if the Company achieves sales of at least $25 millionduring the fifth year (2023) of the explicit vesting period, thestrike price of the options will decrease from $15 to $10. • Theoptions expire after 10 years following the grant date. • Theoptions are classified as equity awards. Additional Facts: • Assumeit is probable at all times that 100% of the employees receivingthe awards will continue providing service to the Company asemployees for the entire five-year explicit service period and thatthe five-year explicit service period is determined to be therequisite service period. • On the grant date, TAC’s managementdetermine that it is probable that the Company’s sales in 2023 willbe $30 million, and therefore it is probable on the grant date thatsales are greater than or equal to at least $25 million in thefifth year. • The grant-date fair value of the options assuming astrike price of $15 is $8 per option. The grant-date fair valueassuming a strike price of $10 per option is $12 per option. TheCFO, Jayne Wilson, has come to you, the controller, and asked youto gather some information for her. First, she wants the types ofconditions (i.e., service, performance, market, or other) presentin the plan for the vesting of the units. Second, she wants to knowhow the service, performance, and market conditions affect vestingof the units. That is, of the various conditions present in theaward, which conditions affect the vesting of the award and whichaffect factors other than vesting of the award (and what is theiraccounting treatment). Third, she would like to know the accountingimpact if TAC’s share price remains steady at $15 through the endof the fifth year. Bonus (5 points) As described above, on January1, 2019 (the grant date), $30 million of sales were probable forthe fifth year (2023). During 2019, 2020, and 2021 $30 million ofsales for 2023 remained probable. At the beginning of 2022 (thefourth year), management determines that it is probable that only$22 million of sales will occur for 2023. What are the journalentries for each year? Cite references from the FASB AccountingStandards Codification.