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question on january 1 2010 trent company granted dick williams anemployee an option 4278480

Question

On January 1, 2010, Trent Company granted Dick Williams, anemployee, an option to buy 100 shares of Trent Co. stock for $30per share, the option exercisable for 5 years from date of grant.Using a fair value option pricing model, total compensation expenseis determined to be $900. Williams exercised his option onSeptember 1, 2010, and sold his 100 shares on December 1, 2010.Quoted market prices of Trent Co. stock during 2010 were asfollows: January 1 $30 per share September 1 $36 per share December1 $40 per share The service period is for 2 years, beginningJanuary 1, 2010. As a result of the option granted to Williams,using the fair value method, Trent should recognize compensationexpense for 2010 on its books in the amount of:                                                                                                                                 a.1,000                                                                                                                                                                                             b. 900 c. 450 d. 0

 

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