Question

American Optical Corporation provides a variety of share-based compensation plans to its employees. Under its executive stock option plan, the company granted options on January 1, 2018, that permit executives to acquire 4 million of the company's $1 par common shares within the next five years, but not before December 31, 2019 (the vesting date). The exercise price is the market price of the shares on the date of grant. $14 per share the fair value of the 4 million options, estimated by an appropriate option pricing model, is $3 per option No forfeitures are anticipated. Ignore taxes Required: 1. Determine the total compensation cost pertaining to the options 2. to 4. Prepare the appropriate journal entries. Complete this question by entering your answers in the tabs below. ROQ I Reg 2 to 4 Determine the total compensation cost pertaining to the options. (Enter your answer in millions lie, 10,000,000 should be nered as 103)

Answer 1

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