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Discuss trent should recognize compensation expense

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Reference no: EM131790748

On January 1, 2018, Trent Company granted Dick Williams, an employee, an option to buy 400 shares of Trent Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $5,400. Williams exercised his option on September 1, 2018, and sold his 400 shares on December 1, 2018. Quoted market prices of Trent Co. stock during 2018 were:

January 1

$30 per share

September 1

$36 per share

December 1

$40 per share

The service period is for two years beginning January 1, 2018. As a result of the option granted to Williams, using the fair value method, Trent should recognize compensation expense for 2018 on its books in the amount of

$0.

$2,700.

$6,000.

$5,400.

Reference no: EM131790748

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