What amount of pretax compensation should oak report

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Reference no: EM133380045

Question: On June 1, Year 1, Oak Corp. granted stock options to certain key employees as additional compensation. The options were for 1,000 shares of Oak's $2 par value common stock at an option price of $15 per share. Market price of this stock on June 1, Year 1, was $17 per share. Using an acceptable option pricing model Oak determined that total compensation cost under the stock option plan was $5,000. The options were exercisable beginning January 2, Year 2, and expire on December 31, Year 3. On April 1, Year 2, when Oak's stock was trading at $21 per share, all the options were exercised. What amount of pretax compensation should Oak report in Year 1 in connection with the options?

On June 1, Year 1, Oak Corp. granted stock options to certain key employees as additional compensation. The options were for 1,000 shares of Oak's $2 par value common stock at an option price of $15 per share. Market price of this stock on June 1, Year 1, was $17 per share. Using an acceptable option pricing model Oak determined that total compensation cost under the stock option plan was $5,000. The options were exercisable beginning January 2, Year 2, and expire on December 31, Year 3. On April 1, Year 2, when Oak's stock was trading at $21 per share, all the options were exercised. What amount of pretax compensation should Oak report in Year 1 in connection with the options?

Reference no: EM133380045

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