Prepare journal entries relating to the stock-option plan

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Question - On November 1, 2009, Olympic Company adopted a stock option plan that granted options to key executives to purchase 55,600 shares of the company's $14 par value common stock. The options were granted on January 2, 2010, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $56, and the fair value option pricing model determines the total compensation expense to be $834,000.

All of the options were exercised during the year 2012: 41,700 on January 3 when the market price was $93, and 13,900 on May 1 when the market price was $107 a share.

How much compensation expense is recognized on 1/2/10?

Prepare journal entries relating to the stock-option plan for the years 2010, 2011, and 2012. Assume that the employee performs services equally in 2010 and 2011.

Reference no: EM131774182

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