Answer:
$120,000
Explanation:
Calculation to determine What amount should M recognize as compensation expense for 2019
First step is to calculate the Value of the option using this formula
Value of the option = Stock options × Fair value of the options
Let plug in the formula
Value of the option=90,000*$5
Value of the option=$450,000
Now let determine compensation expense for 2019
2019 Compensation expense=[($450,000*(100%-10%))*2/3]-$450,000/3 years
2019 Compensation expense=[($450,000*90%)*2/3]-$150,000
2019 Compensation expense=($405,000*2/3)-$150,000
2019 Compensation expense=$270,000-$150,000
2019 Compensation expense=$120,000
Therefore The amount that M recognize should recognize as compensation expense for 2019 is $120,000
