At the beginning of 2020, the Deer Run Corporation made a grant of 40,000 stock options to
eight senior executives. After a vesting period of three years, each option can be exercised at a
price of $50. The fair market value of each option on the grant date is $70. The common stock
has a par value of $1 and a market value on the grant date of $50. On July 1, 2023, and August
30, 2024, 18,000 and 15,000 of the options were exercised. The remaining options were not
exercised by January 1, 2025, the date on which the options expire.
REQUIRED:
1. Calculate compensation expense related to the grant.
2. Prepare the required journal entries for 2020-2025.
