Weiser Corp.on January 1, 2009, granted share options for 40,000 shares of its $10 par value ordinary shares to its key employees.The market price of the shares on that date was $23 per share and the option price was $20.The Black-Scholes option pricing model determines total compensation expense to be $240,000.The options are exercisable beginning January 1, 2012, provided those key employees are still in Weiser's employ at the time the options are exercised.The options expire on January 1, 2013.
On January 1, 2012, when the market price of the shares was $29 per share, all 40,000 options were exercised.The amount of compensation expense Weiser should record for 2011 under the fair value method is

Question

Quizplus · Accepted Answer

The total compensation expense of $240,000 is recognized over the service period from January 1, 2009, to January 1, 2012. Therefore, the annual compensation expense is $240,000 / 3 = $80,000.