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Calculation of compensation expense for fair value

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Problem-

On July 1, 2012, Ellison Company granted Sam Wine, an employee, an option to buy 600 shares of Ellison 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 $2,700. Wine exercised his option on October 1, 2012 and sold his 600 shares on December 1, 2012. The service period is for three years beginning January 1, 2012. As a result of the option granted to Wine, in 2013 Ellison should recognize compensation expense on its books in the amount of

a. $2,700.
b. $900.
c. $675.
d. $0.

Additional information-

This problem related to Basics Accounting and it discusses about calculation of compensation expense for fair value option pricing model for share price.

Reference no: EM13884735

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