On June 30, 2010, Yang Corporation Granted Compensatory Share Options

question 60

Multiple Choice

On June 30, 2010, Yang Corporation granted compensatory share options for 20,000 shares of its $24 par value ordinary shares to certain of its key employees.The market price of the ordinary shares on that date was $31 per share and the option price was $28.Using a fair value option pricing model, total compensation expense is determined to be $64,000.The options are exercisable beginning January 1, 2012, providing those key employees are still in the employ of the company at the time the options are exercised.The options expire on June 30, 2013.
On January 4, 2012, when the market price of the shares was $36 per share, all options for the 20,000 shares were exercised.The service period is for two years beginning January 1, 2010.Using the fair value method, what should be the amount of compensation expense recorded by Yang Corporation for these options on December 31, 2010?

• A)$64,000
• B)$32,000
• C)$15,000
• D)$0