Answer:
On the date of grant of options-January 1 2021 no entries are required yet in the books of accounts
Explanation:
The value of the options granted to the key executives is computed as follows:
total options fair value=number of shares *current fair value per option
number of shares granted is 2.9 million
current fair value per option is $20
total options fair value=2,900,000*$20
=$58,000,000
the total options value would recognized in the books over four year period on straight line basis =$58,000,000/4
=$14,500,000
At 31 December 2021 for instance,the following entries would be passed:
Dr Compensation expense $4,500,000
Cr Paid-in capital-stock options $4,500,000
However, on the date of grant of options-January 1 2021 no entries are required yet in the books of accounts
