On 1/1/10 the stockholders adopted a stock option plan for top executives whereby they would receive rights to purchase up to 60,000 shares of common stock at $40 per share. the par value is $10 per share. the options vest on 1/1/12 and expire on 1/1/14. the Black-Scholes option pricing model determines total compensation expense to be $1,300,000.
prepair the nesessary journal entrys to record compensation expense during 2010 & exercise of the options at 1/1/13. and on 1/1/2010 had the company decided to issue restricted stock as oppsed to stock options on 1/1/2010 assuming the fair value of the stock on that date was equal to $40.