Answer:
$77,600
Explanation:
Total value of compensation expenses:
= No. of options granted × Fair of value options
= 97,000 × $4
= $388,000
Compensation expenses should be recognized per year:
= Total value of compensation expenses ÷ Excercisable time
= $388,000 ÷ 3
= $129,333.33
Expenses recognized in year 1 = $129,333.33
Due to unexpected turnover 20% of the options are forfeited,
Annual compensation = $388,000 × 80%
= $310,400
Annual compensation in year 2:
= Accumulated compensation expenses in year 2 - Expenses recognized in year 1
= [$310,400 × (2/3)] - $129,333.33
= $206,933.33 - $129,333.33
= $77,600
