NRE Corporation has a stock option plan for its continuing employees that provides that each qualified employee may receive an option for a specified number of shares of the company's $1 par value stock. Employees must continue working for the company for three years to earn the grants, which may be exercised any time after the three years, at an option price of $10 per share. On January 1, 2011, employees were granted options for 3,000 shares when the market price was $16 per share. The fair value of the options was $24 each. The expected annual forfeiture rate is 5%. The accounting period ends December 31. NRE uses SFAS No. 123R in accounting for these options. Assume that the estimated and actual forfeiture rates are equal.
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The Answer of NRE Corporation has a stock option plan for its continuing employees that provides that each qualified employee may receive an option for a specified number of shares of the company's $1 par value stock. Employees must continue working for the company for three years to earn the grants, which may be exercised any time after the three years, at an option price of $10 per share. On January 1, 2011, employees were granted options for 3,000 shares when the market price was $16 per share. The fair value of the options was $24 each. The expected annual forfeiture rate is 5%. The accounting period ends December 31. NRE uses SFAS No. 123R in accounting for these options. Assume that the estimated and actual forfeiture rates are equal.
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NRE Corporation Has a Stock Option Plan for Its Continuing