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:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity.

Client-Visits

The act of visiting clients either for business development, maintaining relationships, or providing support and services.

Administrative Expenses

Costs that are not directly tied to the production of goods or services, including salaries of office staff, utilities, and rent.

Tenant-Days

A measure used in the hospitality or rental industry, representing the total number of days for which a property was rented out by tenants.