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A company granted its employees 100,000 stock options on January 1, Year 1. The stock options had a grant date fair value of $15 per option and a three-year vesting period. On January 1, Year 2, the company estimated the fair value of the stock options to be $18 per option. Assuming that the company did not grant any additional options or modify the terms of any existing option grants during Year 2, what amount of share-based compensation expense should the company report for the year ended December 31, Year 2

Sagot :

abiolataiwo2015

Answer:

500,000 per year

Explanation:

Calculation to determine what amount of share-based compensation expense should the company report for the year ended December 31, Year 2

Year 2 Compensation expense=(100,000*$15)/ 3 years

Year 2 Compensation expense=$1,500,000 / 3 years

Year 2 Compensation expense= 500,000 per year

Therefore the amount of share-based compensation expense that the company should report for the year ended December 31, Year 2 is 500,000 per year

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