On July 1, 2010, Ellison Company granted Sam Wine, an employee, an option to buy 400 shares of Ellison Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $1,800. Wine exercised his option on October 1, 2010 and sold his 400 shares on December 1, 2010. Quoted market prices of Ellison Co. stock in 2010 were:

July 1 $30 per share
October 1 $36 per share
December 1 $40 per share

The service period is for three years beginning January 1, 2010. As a result of the option granted to Wine, using the fair value method, Ellison should recognize compensation expense on its books in the amount of

a. $1,800.
b. $600.
c. $450.
d. $0.

Ellison Company should recognize compensation expense on its books in the amount of $600

Explanation:

Solution

The transaction in the books of Ellison Company during the period of July 1st 2010 to December 31st 2010

On July 1st the share value was $30 *400 =  12000

On October 1st 2010 sold at $ 36 * 400 =  14400

The gain on this transaction was = $2,400          

31st July 2010, less compensation expenses =$ 1,800    

The fair vale to be recorded as a gain = $ 600

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi