Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2018, options were granted for 60,000 $1 par common shares. The exercise price equals the $5 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2021, and expire December 31, 2022.
-Each option has a fair value of $1 based on an option pricing model. What is the total compensation cost for this plan?

Question

Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2018, options were granted for 60,000 $1 par common shares. The exercise price equals the $5 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2021, and expire December 31, 2022. 
-Each option has a fair value of $1 based on an option pricing model. What is the total compensation cost for this plan?

Quizplus · Accepted Answer

60,000 × $1 = $60,000

Wall Drugs Offered an Incentive Stock Option Plan to Its