Pasther Brands is a calendar-year firm with operations in several countries. As part of its executive compensation plan, at
January 1, 2024, the company issued 480,000 executive stock options permitting executives to buy 480,000 shares of
Pastner stock for $42 per share. One-fourth of the options vest in each of the next four years beginning at December 31,
2024 (graded vesting). Pastner elects to separate the total award into four groups or tranches according to the year in
which they vest and measures the compensation cost for each vesting date as a separate award. The far value of each
tranche is estimated at January 1, 2024, as follows:
Amount
Vesting Date
December 31, 2024
Vesting per Option
Fair Value
254
December 31, 2025
25%
December 31, 2026
25%
December 31, 2027
55.48
25%
$5.00
Required:
1. Determine the compensation expense related to the options to be recorded each year 2024-2027, assuming Pastier
allocates the compensation cost for each of the four groups franches) separately
2. Determine the compensation expense related to the options to be recorded each year 2024-2027, assuming Pastner
uses the straight line method to allocate the total compensation cost.
Complete this question by entering your answers in the tabs below.
Required
Required 2
Determine the compensation expense related to the options to be recorded each year 2024-2027, assuming Pastrer allocates
the compensation cost for each of the four groups (tranches) separately
Note: Enter your answers in whole dollars