Halo Company is a calendar-year U.S. firm with operations in several countries. At January 1, 2021, the company had issued 40,500 executive stock options permitting executives to buy 40,500 shares of stock for $27. The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting). The fair value of the options is estimated as follows: Vesting Date Amount Vesting Fair Value per Option Dec. 31, 2021 20 % $ 9 Dec. 31, 2022 30 % $ 10 Dec. 31, 2023 50 % $ 14 What is the compensation expense related to the options to be recorded in 2022

Respuesta :

Answer:

$121,500

Explanation:

The calculation of compensation expense is shown below:-

Number of shares vested in 2022 = Issued shares × Percentage vesting shares × Fair value per option

= 40,500 shares × 30% × $10

= $121,500

By multiplying the issued shares with the percentage vesting in shares and the fair value per option we can get the compensation expense