Reference no: EM132703490

On January 1, 2020, Orion Corp. granted an employee an option to purchase 5,000 of Orion's no par value common shares at $50 per share. The Black-Scholes option pricing model determined total compensation expense to be $220,000. The option became exercisable on December 31, 2021, after the employee completed two years of service.

The market prices of Orion's shares were as follows:

January 1, 2020 $40
December 31, 2021 $52

Problem 1: For calendar 2021, Orion should recognize compensation expense of

Option 1: $0.

Option 2: $50,000.

Option 3: $250,000.

Option 4: $110,000.