On January 1, 2016, M Company granted 93,000 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 $4 on the date of grant. What amount should M recognize as compensation expense for 2016?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2016, M Company granted 93,000 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 $4 on the date
of grant. What amount should M recognize as
compensation expense for 2016?
Transcribed Image Text:On January 1, 2016, M Company granted 93,000 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 $4 on the date of grant. What amount should M recognize as compensation expense for 2016?
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