Under its executive stock option plan, Z Corporation granted options on January 1, 2009, that permit executives to purchase 15 million of the company's $1 par common shares within the next eight years, but not before December 31, 2011 (the vesting date). The exercise price is the market price of the shares on the date of grant, $18 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. The options expired in 2017 without being exercised. By what amount will Z's shareholder's equity be increased?
A)$ 0 million
B)$270 million
C)$315 million
D)$330 million The $60 million total compensation is expensed equally over the three-year vesting period, increasing the balance in the Paid-in capital-stock options account.Upon expiration:

Question

Quizplus · Accepted Answer

Since the options were not exercised, there is no impact on shareholder's equity. The compensation expense related to the options would have been recorded in the Paid-in capital-stock options account over the vesting period, but there would be no direct impact on shareholder's equity when the options expire without being exercised.

Under Its Executive Stock Option Plan, Z Corporation Granted Options