Recognization of Compensation Expense
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G of O, Inc, grants its president 2000 stock options on Jan 1 2004, that gives him rights to purchase shares of the company for $40 per share on Dec 31, 2005. At the time the options were granted, the fair value of the options totaled $20,000. At Dec 31, 2004, the company's stock sold for $45 per share and at Dec 31, 2005, the selling price of the stock was $55 per share. On Dec 31, 2005, the president resigned from the company and did not elect to exercise the options. In its 2005 financial statements, G of O, Inc, would recognize compensation expense relative to the options in what amount?
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Solution Summary
The solution discusses in what amount G of O, Inc, would recognize compensation expense relative to the options.
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Please find my response below.
The total fair value of the options is 20,000. This will be recognized over a period of two years (which is ...
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