On January 1, 2018, Sheridan Company granted Dic Williams, an employee, an option to buy 500 shares of Sheridan Co. stoc...
On January 1, 2018, Sheridan Company granted Dic Williams, an
employee, an option to buy 500 shares of Sheridan Co. stock for $30
per share, the option exercisable for 5 years from date of grant.
Using a fair value option pricing model, total compensation expense
is determined to be $5240. Williams exercised his option on
September 1, 2018, and sold his 500 shares on December 1, 2018.
Quoted market prices of Sheridan Co. stock during 2018
were:
| January 1 | $28 per share |
| September 1 | $34 per share |
| December 1 | $38 per share |
The service period is for two years beginning January 1, 2018. As a
result of the option granted to Williams, using the fair value
method, Sheridan should recognize compensation expense for 2018 on
its books in the amount of
| $0. |
| $5840. |
| $2620. |
| $5240. |
Homework Answers
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