Prepare the compensation expense journal entry

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Problem - Performance-Based Share Option Plan On January 1, 2019, Rhine Company adopts a performance-based share option plan for its 80 key executives. Each executive is granted a maximum of 70 share options, but the number of options that vest depends on the percentage increase in Rhine's sales over a 3-year service period. If by December 31, 2021, sales have increased by at least 10%, 50 options will vest for each executive; if sales have increased by at least 15%, all 70 options will vest. On the grant date, Rhine estimates that its sales will increase by 12% over the service period, and that its employee turnover rate over the 3-year service period will be 6%. It also determines that the fair value of an option expected to vest is $13.40. At the end of 2018, actual sales had increased by 16% for the service period, and the actual turnover was 6 key executives for the service period.

Required -

Prepare a schedule of Rhine's computations for its compensatory share option plan for 2019 through 2021 (round all computations to the nearest dollar).

Prepare the compensation expense journal entry for 2019.

Reference no: EM132889103

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