The fair value of a similar option at the grant date is 640


Shafer Corporation (a nonpublic company) established an employee stock option plan on January 1, 2011. The plan allows its employees to acquire 20,000 shares of its $5 par value common stock at $70 per share, when the market price is $75. The options may not be exercised until five years from the grant date. The risk-free interest rate is 6%, and the stock is expected to pay dividends of $3 annually.

The fair value of a similar option at the grant date is $6.40. What is the amount of deferred compensation expense that should be recorded in year one?

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Financial Accounting: The fair value of a similar option at the grant date is 640
Reference No:- TGS01483325

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