On January 1, 2018, D Corp

question 117

Multiple Choice

On January 1, 2018, D Corp. granted an employee an option to purchase 6,000 shares of D's $5 par common stock at $20 per share. The options became exercisable on December 31, 2019, after the employee completed two years of service. The option was exercised on January 10, 2020. The market prices of D's stock were as follows: January 1, 2018, $30; December 31, 2019, $50; and January 10, 2020, $45. An option pricing model estimated the value of the options at $8 each on the grant date. For 2018, D should recognize compensation expense of:

• A) $0.
• B) $24,000.
• C) $30,000.
• D) $60,000.

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Definitions:

External Strategy

A plan of action that focuses on factors outside an organization to achieve its goals.

Dynamic Strategy

A flexible, adaptive strategy that allows an organization to respond quickly to market changes, competitive actions, and external forces.

Increasing Differentiation

A strategy where businesses aim to make their products or services stand out more distinctly from competitors'.

Decreasing Cost

The reduction in the total cost of production or operation over time, often achieved through efficiencies, economies of scale, or technological advancements.