Mayhill Inc. reports 4,287,000 stock options granted during fiscal 2017 at a weighted-average fair-value of $23.10. The average vesting period for these options is four years. Mayhill should record a $99,029,700 expense on its income statement related to this option grant.

Question

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The correct expense calculation for the stock options should be the number of options (4,287,000) multiplied by the weighted-average fair value ($23.10), which equals $99,029,700. However, since the options vest over four years, this total expense should be recognized over the vesting period, not all at once. Therefore, the annual expense recorded on the income statement would be one-fourth of $99,029,700, assuming straight-line expense recognition.