On October 1, 2018, Iona Frisbee Co. issued stock options for 300,000 shares to a division manager. The options have an estimated fair value of $3 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 6% in three years. Frisbee initially estimates that it is probable the goal will be achieved. How much compensation will be recorded in each of the next three years?
A) 0
B) 100,000
C) 300,000
D) 900,000

Question

Quizplus · Accepted Answer

The estimate of the total compensation would be: 11ea937b_35a1_5fdb_a419_8baa17b688e3_TB2599_00 One-third of that amount, or $300,000, will be recorded in each of the three years.