On December 31, 2018, in Order to Retain Certain Key

question 83

Multiple Choice

On December 31, 2018, in order to retain certain key executives, Entebbe Corporation granted them stock options. 25,000 options were granted at an option price of $ 40 per share. Market prices of the shares were as follows: December 31, 2019 $ 35 per share
December 31, 2020 $ 39 per share
The options were granted as compensation for services to be rendered over a two-year period beginning January 1, 2019. The Black-Scholes option pricing model determined total compensation expense to be $ 500,000. The amount of compensation expense Entebbe should have recorded for calendar 2020 is

• A) $ 250,000.
• B) $ 500,000.
• C) $ 875,000.
• D) $ 1,000,000.

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Definitions:

Preoperational

A stage in Piaget's theory of cognitive development where children between ages 2 and 7 begin to engage in symbolic play but lack the ability of operational thought.

Concrete Operational

A stage in Jean Piaget's theory of cognitive development during which children gain the abilities of conservation (understanding that quantities remain the same despite changes in shape or appearance) and logical thought about physical objects and their properties.

Assimilation

A cognitive process in Piaget's theory where individuals integrate new information into preexisting knowledge frameworks.

Mental Structures

Conceptual frameworks or cognitive constructs that are used to organize and interpret experiences and information.