Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Pastner Brands is a calendar-year firm with operations in several countries As part of its...

Pastner Brands is a calendar-year firm with operations in several countries As part of its executive compensation plan

Pastner Brands is a calendar-year firm with operations in several countries. As part of its executive compensation plan, at January 1, 2018, the company issued 400,000 executive stock options permitting executives to buy 400,000 shares of Pastner stock for $34 per share. One-fourth of the options vest in each of the next four years beginning at December 31, 2018 (graded vesting). Pastner elects to separate the total award into four groups (or tranches) according to the year in which they vest and measures the compensation cost for each vesting date as a separate award. The fair value of each tranche is estimated at January 1, 2018, as follows: Vesting Date....................... Amount Vesting ...............Fair Value per Option Dec. 31, 2018 .....................................25% ...............................$3.50 Dec. 31, 2019 .....................................25% .................................$4.00 Dec. 31, 2020..................................... 25% .................................$4.50 Dec. 31, 2021 ......................................25% .................................$5.00 Required: 1. Determine the compensation expense related to the options to be recorded each year 2018-2021, assuming Pastner allocates the compensation cost for each of the four groups (tranches) separately. 2. Determine the compensation expense related to the options to be recorded each year 2018 2021, assuming Pastner uses the straight-line method to allocate the t

Apr 21 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions