On January 1, Year 1, Lord Corp. granted stock options for 10,000 shares at $38 per share as additionalcompensation for services to be rendered over the next three years. Using an acceptable option pricingmodel, Lord calculated total compensation cost of $90,000. The options are exercisable during a 4-yearperiod beginning January 1, Year 4, by grantees still employed by Lord. Market price of Lord's stock was $47per share at the grant date. No stock options were terminated during Year 1. In Lord's Year 1 incomestatement, what amount should be reported as compensation expense pertaining to the options? a. $90,000b. $40,000c. $30,000d. $0
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