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On January 1, 2008, NCAA Company adopted a compensatory stock option plan and granted its managers 10,000 options to buy shares of common stock; each option can be used to acquire a share of common stock at a price of $25 a share. The fair value of each option was $7.50 on January 1, 2008. The options can be converted into common stock after July 1, 2011. The required service period is three years. How much compensation expense will be recorded for the year ending December 31, 2010 assuming that the fair value approach is used?

a. $75,000

b. $175,000

c. $50,000

d. $25,000

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Accounting Basics, Accounting

Category:- Accounting Basics
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