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Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2018, options...

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.

Which is the correct entry to record compensation expense for the year 2018?

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Answer #1

The entry would be

Account Debit Credit
Compensation expenses 20,000
Paid in capital - Stock options 20,000

(60,000*1)/3

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