Homework Answers
Compensation Expense 2019 = $ 18
Compensation Expense 2020 = $ 19
Explanation
Total Compensation = Purchase price x Fair value of the options
= 12 million x $5 = $ 60,000
Compensation Expense 2019
= ($60 million * 95% * 2/3) – 20
= 38 -20
= $ 18
Compensation Expense 2020
= ($60 million * 95% * 3/3) – (20 + 18)
= 57 - 38
= $ 19
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