Question

Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2021, options were granted for 66,000 $1 par common shares. The exercise price equals the $4 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2024, and expire December 31, 2025. Each option has a fair value of $1 based on an option pricing model. What is the total compensation cost for this plan

Answer 1

$66,000

Step-by-step explanation:

Calculation to determine the total compensation cost for this plan

Using this formula

Total compensation cost=Options granted *Option fair value

Let plug in the formula

Total compensation cost=66,000 x $1

Total compensation cost= $66,000

Therefore the total compensation cost for this plan is $66,000