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What is the impact on heerey total stockholders equity

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Question - On December 31, 2007, Heerey Company grantede some of its executives options to purchase 60,000 shares of the company's $50 par common stock at an option price of $60 per share. The Black-Scholes option pricing model determines total compensation expenses to be $1,200,000. The options become exercisable on January 1, 2008, and represent compensation for executives' past and future services over a three-year period beginning Jnauary 1, 2008. What is the impact on heerey's total stockholders' equity for the year ended December 31, 2007, as a result of this transaction under the fair value method?

a. $1,200,000 decrease

b. $400,000 decrease

c. $0

d. $400,000 increase

Reference no: EM131765184

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