What should Ajax do to account for granted stock options

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Question - Ajax Corporation has granted its top five executives 100,000 stock options each on January 1st. The strike price of the options is equal to the stock price on the day of the grant. The options vest in three years. At the end of the first year, what should Ajax do to account for these granted stock options?

Record a debit to Compensation Expense equal to one third of the value of the stock options.

Do nothing; no cash has changed hands.

Record a debit to Compensation Expense equal to the full value of the stock options.

Record both a debit to Compensation Expense, and a credit to a liability account Stock Options Payable, equal to one third of the value of the stock option.

Record a credit to a liability account Stock Options Payable equal to one third of the total value of the stock options.

Reference no: EM132860997

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