Result of transaction under the fair value method


On December 31, 2007, Jansen Company granted some of its executives options to purchase 45,000 shares of the company's $50 par common stock at an option price of $60 per share. The Black Scholes option pricing model determines total compensation expense to be $900000. The options become exercisable on January three-year period beginning January 1,2008. What is the impact on Jansen's total stockholders' equity for the year ended December 31, 2007, as a result of this transaction under the fair value method?

a) $300000 increase

b) $300000 decrease

c) $900000 decrease

d) $0

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Accounting Basics: Result of transaction under the fair value method
Reference No:- TGS062677

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