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Yu Company is a calendar-year U.S. firm with operations in several countries. At January 1,...

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Accounting

Yu Company is a calendar-year U.S. firm with operations in several countries. At January 1, 2024, the company had issued 42,000 executive stock options permitting executives to buy 42,000 shares of stock for $27. The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting). The fair value of the options is estimated as follows:

Dec. 31, 2024 20%. $9

Dec. 31, 2025 30% $10

Dec. 31, 2026 50% $14

Assuming Yu uses the straight-line method, What is the compensation expense related to the options to be recorded in 2025?

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