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In order to retain certain key executives, Staley Corporation granted them incentive stock options on December 31, 2012. 30,000 options were granted at an option price of $35 per share. Market prices of the stock were as follows:

December 31, 2012 $46 per share
December 31, 2013 $51 per share

The options were granted as compensation for executives' services to be rendered over a two-year period beginning January 1, 2013. The Black-Scholes option pricing model determines total compensation expense to be $300,000. What amount of compensation expense should Staley recognize as a result of this plan for the year ended December 31, 2013 under the fair value method?

a. $150,000.
b. $300,000.
c. $330,000.
d. $1,050,000

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9415823

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